Jefferies On Micron Technology: 'Solid Technology Progress + Inotera = Buy'

In a report published Monday, Jefferies analyst Sundeep Bajikar commented that

is making "better than expected" progress in 20nm DRAM and 3D NAND. Bajikar also noted that Micron will likely see its DRAM gross margins expand "significantly," helped in calendar year 2016 by the company's updated contract agreement with Inotera. The analyst also added that its NAND margins are likely to close the gap with its competitors, helped in part by migration to TLC and 3D NAND. Bajikar noted that in Micron's Analyst Day, the company highlighted its updated supply contract with Inotera which will boost its DRAM gross margins by eight percent to 10 percent in 2016. The analyst added that the contract allows Micron to get the full benefit of its 20nm cost reductions by capturing a higher share of gross profits from Inotera. Shares were reiterated with a Buy rating with a price target raised to $45 from a previous $42.