Micron Targets Cut At Wedbush, Firm Still Supports Neutral Scenario

• Micron Technology, Inc. MU have declined more than 35 percent over the past three months, following the F3Q earnings report.
• Wedbush’s Betsy Van Hees has maintained a Neutral rating on the company, while lowering the price target from $19 to $17.
• Although Van Hees believes that the DRAM oversupply cycle is closing to bottoming out, industry checks suggest that the cycle has not yet ended.

“We are concerned that the near-term spot PC DRAM pricing stabilization could be short lived as the uplift from typical holiday seasonality in CQ4 is looking to be muted due to weak PC and mobile demand affected by macro uncertainty,” Van Hees elaborated.

Van Hees expects the FQ4 results to miss the expectations and for Micron Technology to revise its FQ1 guidance downwards.

According to data collected by DRAMeXchange, DDR4 4Gb spot prices have mostly been flat for September, following a quarter-on-quarter decline of 28 percent in ASPs. On the other hand DDR3 4Gb spot prices declined 6 percent in September, after have declined 22 percent quarter-on-quarter.

“Following our recent checks, we are concerned that PC DRAM ASP stabilization is temporary and PC DRAM ASPs will likely decline again once the DRAM industry gets past peak seasonality in mid-November,” the Wedbush report stated.

The FQ4, FQ1 and FY2016 estimates have been reduced due to weakness in PC DRAM demand and ASPs, along with pricing pressure in SSDs from Samsung.