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.
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Pitzer expects Micron to:
- Indicate that its February quarter is tracking in-line with guidance.
- 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.”
- 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.
- Reiterate CapEx at $5.2-5.8bn, with $500m coming from partners.
- 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.”
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