Needham's Gill Says 'Buy Micron' After Intel Earnings

In a report published Thursday, Needham analyst Rajvindra S. Gill maintained a Strong Buy rating and price target of $40 on

. Following the results and guidance announced by

, the analyst believes that Micron Technology's stock offers an attractive buying opportunity. "After witnessing a series of negative PC data points and fears of a slowdown in data center spending, INTC forecasted sales higher than the Street driven by PC inventory replenishment (ramp of INTC's Skylake platform and Windows 10 OS builds), increase server CPU sales, IoT, and higher GMs," analyst Gill elaborated. The analyst expects PC weakness to let up in 2H15/2016, with inventories needing to be replenished. This is likely to help stabilize PC DRAM pricing. In addition, Micron Technology is expected to benefit in 2016 from a higher TLC NAND mix, as well as cost leverage, with 20nm kicking in. Intel's results also suggest strength in server growth, networking, storage, IoT and cloud, albeit offset by weaker enterprise spending. "This bodes well for overall environment," analyst Gill said, adding, "Cost headwinds in 2015 should become tailwinds in 2016." The stock valuation is also expected to be supported by M&A optionality.