Sterne Agee CRT Still Buying Micron After Meeting With Management

After a two-day investor meet, Sterne Agee CRT analysts Douglas Freedman and Kevin Chen remain buyers of Micron Technology, Inc. MU shares. The brokerage also kept a price target of $18.00 on the stock.

The brokerage believes the continued bit production ramp of 20nm DRAM and 3D NAND in 2H should offset the current ASP headwind. Although the management did not offer any incremental explanation in respect of the Inotera deal delay, the analysts continue to view the delay as management exercising rights granted in the deal that will finally gain shareholders.

The two analysts think the negative market reaction is overdone. They believe the current valuation showed attractive risk/reward and provided good downside support. Their contention is the fundamental recovery in 2H should fuel P/BV multiple toward its target of 1.4X.

Related Link: Micron Technology Expects Delay In Closing Of Inotera Acquisition

Sterne Agee analysts viewed, "MU remains confident in the competition of 3D NAND ramp despite Samsung's first mover advantage, believing its own solution will outperform others' on several metrics. In addition, MU also expects its 2nd gen 3D NAND, which should yield."

In addition, the two analysts pointed out that Samsung's being less aggressive in adding DRAM wafers and migrating to 1x nm node should also help stabilize pricing in 2H. The brokerage also expects the qualification issue at Apple is on track to be solved.

Micron Management indicated their plans to pursue mobile business more aggressively next year. As far as the upcoming iPhone model, the analysts said, "We see a likely introduction of 256GB model and a removal of a 16GB model."

Shares of the company traded 3.4 percent down on Friday shortly before the closing bell.