Wall Street Bulls Still Like Micron After Analyst Day
Following Micron Technology, Inc. (NASDAQ: MU)'s Analyst Day on February 12, analysts across the Street are weighing in on the semiconductor provider.
With a series of upgrades already coming in, Micron has seen a significant increase on the day, after a long Presidents' Day weekend.
In addition to Mizuho Securities and Goldman Sachs both upgrading ratings on Micron, Credit Suisse and Pacific Crest have issued reports updating the company and highlighting the analyst event.
The stcok traded recently at $10.40, up 3.8 percent.
According to analysts Monika Garg and Jason Celino, Micron's Analyst Day emphasized the company's acceleration of “next-generation technology roadmap for both DRAM and NAND.”
The analysts believe that if the roadmap is followed, the company should be able to effectively shrink the margin gap with NAND and DRAM peers.
“Micron is facing lower DRAM margins than its peers as the company has lagged in transitioning to advanced DRAM nodes,” the analysts explained. “Micron discussed its plan for the next generation of DRAM node transitions, which is similar in timing to its DRAM peers. This should help Micron catch up.”
Additionally, Garg and Celino elaborated on the NAND production, stating that following the analyst event, they have gathered that Micron is due to see a 25+ percent cost reduction for 3D NAND Gen 1; “[A]nd the company is pushing TLC for 3D NAND, which should help to achieve higher NAND margins.”
The firm maintained its Overweight rating on Micron, with a price target of $18.00.
Similarly, Credit Suisse analysts highlighted the importance of “minding the gap” for Micron.
In its company update, Credit Suisse commented on the DRAM and NAND gaps, “At current valuation (EV 0.5x replacement value), we believe any progress in closing the cost ‘gap' will drive stock performance, and we see MayQ as an inflection in DRAM, and late CY16 as an inflection in NAND.”
The note pointed toward five catalysts:
- 1. “20nm DRAM tracking inline with bit crossover in MayQ, and targeted cost reduction CAGR of 15–25 percent thru FY17”
- 2. “3D NAND is tracking better-than-expected with bit crossover in NOVQ and cost reduction CAGR of 25 percent thru FY 17, better than CS at 18 percent”
- 3. “Potential GM in NAND of >40 percent by F4Q17 (vs CS estimate at 20 percent) driving overall FY17 EPS of >$2 vs CS at $.145”
- 4. “CapEx of $5 billion (net of partner contribution) largely inline, with DRAM CapEx tracking at high end of guidance”
- 5. “Inotera merger to close in July, with likely more debt/less equity in order to reduce dilution”
Additionally, the analysts underlined two more concrete (verses transitory) cost reductions ahead, “In DRAM, an alignment/consistency of R&D and tool set across multiple acquired fabs […] in NAND we see MU/INTC architecture (floating gate) as unique and INTC's Dalian CapEx as a vote of confidence.”
Credit Suisse has an Outperform rating on the stock, with an price target of $20.
Latest Ratings for MU
|Oct 2016||Goldman Sachs||Maintains||Neutral|
|Oct 2016||Credit Suisse||Maintains||Outperform|
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