Mizuho: Time To Buy Micron

In a report published Friday, Mizuho Securities analysts initiated coverage of

with a Buy rating and a price target of $39. The DRAM industry has been through a period of consolidation, from there being about 9-10 OEMs in 2008 to merely 3 DRAM OEMs currently controlling around 94 percent of DRAM supply. In view of the increasing DRAM complexity and challenges, companies need to focus on profits and margins. While the PC market seems weak ahead of the Windows 10 launch and Skylake, the DRAM environment could improve in the second half of the year, with stronger PC and handset ramps. "While MU has been pulling in its 25/20nm DRAM shrink ahead of schedule, we believe the overall higher 20nm DRAM Capex intensity should still keep the focus on maintaining profitability in DRAM," the analysts said. In the report Mizuho noted, "While near-term DRAM could be weaker given PC weakness ahead of Windows10, 2H15 should see both trends reverse. While NAND remains a show-me story for MU, the key is to get TLC and 3D-NAND to drive GM improvement." Moreover, the analysts believe that the company's new CFO Ernie Maddock has deep experience with Converts and could meet investors more often, which should help "allay any roadmap concerns."