MKM Partners: Time To Buy Micron

• Micron Technology, Inc. MU has declined more than 50 percent year-to-date.
• Ian Ing, executive director at MKM Partners, upgraded the stock to Buy from Neutral with a $23 price target.
• Ing noted that this was "not a call that fundamentals have sustainably turned positive," rather a reaction to improved risk/reward ratio.

MKM Partners upgraded Micro Technology on the basis that the valuation is attractive following a 50 percent decline this year. Ian Ing said that the stock is trading at just 1x its "true" book value. Ing puts that book value at around $17 per share after adjusting the present book value ($10.65 per share) with a stake in Inotera that's undervalued by $2 billion, among other adjustments.

Ing, however, warned investors that the note should not be construed as belief that the company's fundamentals have "sustainably turned positive." At the same time, Ing did mention that the firm noticed a "cautiously optimistic" tone from Micron's VP of Investor Relations during a recent roadshow.

Though Ing was not ready to pronounce an end to Micron's troubles, he highlighted a potential $5 billion opportunity as supporting evidence for the firm's upgrade. That opportunity is not accounted for in other "investor models," he argued, calling the potential a "call option."

During the past 52 weeks, Micron has traded between $13.50 and $36.59, hitting the former in late August and the latter back in January. Since those highs, however, the stock has been in a solid downtrend. If MKM's note is correct, that downtrend could be coming to an end.