Summit's Sundararajan On Micron: 'Time And Samsung Wait For No-One'

In a report published Monday, Summit Research analyst Srini Sundararajan maintained a Buy rating on shares of Micron Technology, Inc. MU with a price target slashed to $25 from a previous $30 following the company's "ho-hum" Analyst Day presentation.

According to Sundararajan, Micron is operating a difficult environment due to a "sluggish" smartphone market in China, "tepid" PC growth and a "struggling" Samsung mobile sell-through. In fact, the analyst suggested that "time and Samsung don't wait for anyone" but "things can only get better from here, hopefully."

See Also: Analysts Mixed On Micron As Shares Reach Two-Year Lows

"This analyst day was probably the shortest one we have ever been to, not only in time, but also in its sparse details," Sundararajan wrote. "Very little was said and what was said was in generalities and the answers to the questions after the presentation did not spill any new insights into the open either."

With that said, the analyst noted there are both upside and downside risks to owning the stock. Upside risk involves a "rapid" improvement in DRAM fundamentals while downside risk includes: 1) a loss of market share, 2) a lack of PC growth, and 3) a softer global economy.

Sundararajan said Micron's presentation failed to "ameliorate" the recognition of the bearish environment the company finds itself in. On the other hand, the analyst did state that the company's NAND is "shaping up" to be a better story in 2016 versus prior years. In addition, the company's capital expenditure increase was a positive and an indication that it has "woken up" to Samsung's superiority and that "it needs to spend to catch up."

Finally, Sundararajan revised his fiscal 2016 earnings per share estimate to $2.50 from a previous $2.85. His new $25 price target is based on a 10x multiple on his 2016 earnings estimate.