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About Micron's Manufacturing Transition...Here's What The Street Thinks

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Micron Technology, Inc. (NASDAQ: MU) is best known for producing semiconductor devices, including DRAM, SDRAM, flash memory chips, and SSDs. The company's production lines have been transitioning to new-generation 20-nanometer circuitry in an effort to improve performance using less power, reduce the size of its chips, and lower production costs. On March 17, the technology company announced a new line of "ultra" memory products intended to enable next-generation cars.

On March 17, RBC Capital Markets analyst Doug Freedman maintained an Outperform rating on Micron, but slashed his price target from $44 to $40. The cut in Freedman's price target stems from his admission of being "overly aggressive in assuming that the 20-nanometer transition would be faster and smoother than expected." Freedman now expects back-end assembly and test costs to be higher in order to lower Micron's gross profit margin.

In regards to Micron's new "ultra" memory products, Freedman noted "Micron is a longer-term play on the favorable changes in the memory industry given limited risk of oversupply and stronger demand cycles… While Micron could be viewed as a restructuring story in the near term given its many moving parts, we believe that the company's effort to improve Nand quality now depends on TLC (triple level cell)/3D Nand in the back half of 2015."

Freedman has rated Micron 26 times since February 2011. Although he only has a 43 percent success rate recommending the stock, he also has a +11.5 percent average return per MU recommendation. Overall, the analyst has a 75 percent success rate recommending stocks and a +24.2 percent average return per recommendation.

Similarly on March 17, Needham analyst Rajvindra Gill maintained a Buy rating on Micron with a $60 price target.

Gill noted, "We believe the stock is oversold and at current price levels represents an attractive entry point. We expect gross margins will improve markedly in the C2H15/ CY16 driven by higher TLC NAND mix, higher mobile DRAM pricing, DDR4 transition, new Inotera agreement positively affecting GMs in 2016 and tight DRAM supply. As such, our FY16 Non-GAAP EPS of $4.75 and our $60 PT remain unchanged."

Gill has rated Micron 16 times since December 2013, earning a mere 25 percent success rate recommending the company and a +1.8 percent average return per MU recommendation. Overall, the analyst has a 63 percent success rate recommending stocks and a +21.4 percent average return per recommendation.

On average, the top analyst consensus for Micron on TipRanks is Moderate Buy.

Latest Ratings for MU

DateFirmActionFromTo
Dec 2016Summit Redstone PartnersUpgradesSellBuy
Dec 2016Loop CapitalInitiates Coverage OnBuy
Dec 2016CitigroupInitiates Coverage OnBuy

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The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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