Micron's Momentum Intact As Q1 Report Approaches

Deutsche Bank’s Sidney Ho expects the continued ASP strength for Micron Technology, Inc. (NASDAQ: MU)'s DRAM and NAND, along with disciplined industry capex and accretion from the Inotera acquisition, to drive earnings power and margin expansion for the company.

Ho reiterated a Buy rating on the company, with a price target of $24.

Beat Results Expected

The analyst expects Micron Technology to report its FQ1:17 results in line with the preliminary results when it reports its results after market close on December 21.

The preliminary results were above the high end of the original guidance and the previous estimates.

The company attributed the robust results mainly to the strength in DRAM ASP, expecting the FQ1 revenue to come in at $3.975 billion, with gross margin of 25.5 percent and EPS of $0.28, all ahead of the estimates.

“There could also be upside to NAND given what we observed as a stronger-than-expected ramp of its 3D NAND products,” Ho stated.

Momentum To Continue

The analyst also expects Micron Technology’s FQ2 guidance to be ahead of the ex-Inotera estimates, although PC DRAM shortage was likely to persist despite a seasonal decline in demand.

“At the same time, mobile DRAM prices are rising for the first time since 3Q 2013, suggesting that the supply tightness is broad-based,” Ho went on to say.

At last check, shares of Micron were up 1.13 percent at $20.50.

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