Deutsche Ups Micron's Price Target To $35

Micron Technology, Inc. MU reported its fiscal second-quarter results marginally ahead of its preannouncement.

Deutsche Bank’s Sidney Ho reiterated a Buy rating on the company while raising the price target from $30 to $35.

Alleviating Concerns

The analyst believes Micron Technology’s Q3 guidance for robust revenue growth and profitability could ease concerns regarding the memory cycle being past its peak in the near future.

“We are particularly impressed with the company’s ability to execute on its technology roadmap for both DRAM and NAND, driving solid bit growth and cost improvements,” Ho went on to say.

The analyst expects the memory market to continue to see shortage through 2017, as memory suppliers continue to pursue “disciplined capex behavior.”

Q2 Results

For Q2, Micron Technology reported revenue of $4.65 billion, in line with the preannouncement provided March 2.

Gross margins for the quarter came in at 38.5 percent, with non-GAAP EPS of $0.90, which were slightly ahead of the preannouncement.

DRAM revenue increased 21 percent quarter on quarter to $2.94 billion, driven by bit growth of 21 percent and ASP (average selling price) up 1 percent. DRAM gross margins grew to 44 percent, from 28 percent in Q1.

In addition, NAND revenue was up 11 percent quarter on quarter to $1.55 billion, with NAND bit growth of 18 percent quarter on quarter, offset by an ASP decline of 6 percent.

Robust cost improvements led to NAND gross margins rising to 31 percent.

Q3 Guidance

Micron Technology issued its Q3 guidance well ahead of expectations, with revenue guided to $5.20 billion–$5.60 billion, ahead of the estimate and the consensus.

The company guided to non-GAAP gross margin of 44–48 percent for, indicating that “a healthy pricing environment will continue.”

The EPS guidance also beat expectations at $1.43–$1.57.

Micron shares were seen up 13.49 percent in Friday's pre-market session at $30.05.

Related Link:

Credit Suisse Sees 40% Upside In Micron Shares

Micron Spikes On Earnings Beat, Strong Revenue ________ Image Credit: By Prattflora at Chinese Wikipedia [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
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Posted In: Analyst ColorEarningsLong IdeasNewsGuidancePrice TargetAnalyst RatingsMoversTechTrading IdeasDeutsche BankSidney Ho
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