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Micron Set For Big Analyst Day...Stock Could Eventually Double, Says Credit Suisse

Micron Set For Big Analyst Day...Stock Could Eventually Double, Says Credit Suisse
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Credit Suisse’s John W. Pitzer maintained an Outperform rating for Micron Technology, Inc. (NASDAQ: MU) with a price target of $20. The company is scheduled to host its Winter Analyst Day on February 12.

Analyst John Pitzer said that while Micron’s Analyst Day would likely be largely in-line with prior commentary, the event could be “modestly positive,” in view of the 32.2 percent decline in the company’s share price since last earnings, versus a 15.5 percent decline in SOX.

Pitzer expects Micron to:

  1. Indicate that its February quarter is tracking in-line with guidance.
  2. Reiterate the crossover for 20nm in the May quarter. The analyst estimated an improvement of about 10-15 percent in the company’s relative cost at 20nm, “even as peers begin to ramp 18nm.”
  3. Indicate good progress on 3D NAND with yields tracking ahead of plan, while also reiterating its prior target of 50 percent bits on 3D by the end of year.
  4. Reiterate CapEx at $5.2-5.8bn, with $500m coming from partners.
  5. Reiterate that the Inotera merger is tracking to be completed by mid-2016. The analyst pointed out, however, that given the decline in share price, the share count is likely to increase by 10 percent from the initial expectations for 6 percent when the deal was announced.

Pitzer believes that the risk-reward is attractive at current valuations. He added, “Cost headwinds becoming tailwinds in DRAM, optionality around 3D and XPoint in late CY16/17 and relatively high strategic value (relevant with China initiatives to enter Memory) should all support recovery for the stock from current levels.”

Latest Ratings for MU

Oct 2016BairdMaintainsOutperform
Oct 2016Goldman SachsMaintainsNeutral
Oct 2016Credit SuisseMaintainsOutperform

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