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Why The Quants Like Micron

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Why The Quants Like Micron
  • Micron Technology, Inc (NASDAQ: MU) shares have been trending lower after achieving their 52-week high of $36.04 on December 4 2014.
  • Macquarie’s analyst Deepon Nag maintained an Outperform rating on the company with a price target of $30.
  • Quantitative and fundamental factors make Micron’s stock appropriate for investors with high risk tolerance, Nag said.

Analyst Deepon Nag mentioned that pricing in the DRAM industry has stabilized with the pickup in PC build and as Apple Inc. (NASDAQ: AAPL) procures more memory for its iPhone 6s build.

An analysis by the Macquarie quant team has revealed that Micron Technology has “very low exposure to ‘uncertainty’” and is thus “currently pricing in excess returns due to elevated levels of uncertainty in the market.”

The analysis further showed that stocks that have lower exposure to uncertainty tend to outperform over the longer term due to their lower inherent risk against shifts in uncertainty.

Micron Technology’s performance is, however, likely to be impacted by the maturing smartphone market, slowdown in China and oversupply from 20 mm transactions and softer-than-expected pricing in F4Q, the Macquarie report stated.

Nag pointed out that the fundamental and quantitative factors provide confidence that “for investors with higher risk tolerance, upside potential appears to outweigh downside risk.”

The EPS estimates for FY15 and FY16 have been reduced from $2.66 to $2.64 and from $2.30 to $2.08, respectively.

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Latest Ratings for MU

DateFirmActionFromTo
Jan 2020UpgradesNeutralBuy
Jan 2020UpgradesMarket PerformOutperform
Dec 2019ReiteratesBuy

View More Analyst Ratings for MU
View the Latest Analyst Ratings

Posted-In: Deepon Nag MacquarieAnalyst Color Long Ideas Reiteration Analyst Ratings Tech Trading Ideas Best of Benzinga

 

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