Market Overview

KeyBanc: Cloud Providers Fuel Micron's Strong Q2

Share:
KeyBanc: Cloud Providers Fuel Micron's Strong Q2
Related MU
44 Stocks Moving In Tuesday's Mid-Day Session
Benzinga's Top Upgrades, Downgrades For October 23, 2018
Micron Technology Inc. (MU) Management Presents at UBS Global Technology Conference (Transcript) (Seeking Alpha)

Micron Technology, Inc. (NASDAQ: MU) reported forecast-beating non-GAAP earnings per share and revenues for its fiscal 2018 second quarter after the close Thursday. 

The Analyst

KeyBanc Capital Markets analyst Weston Twigg maintained an Overweight on Micron and increased the price target from $65 to $72, suggesting 22-percent upside from current levels.

The Thesis

Micron's Q2 results and third-quarter guidance reflect high memory demand that supported record revenues, margins and cash flow, Twigg said in a Thursday note. (See the analyst's track record here.) 

"Demand from cloud service providers was a meaningful driver of upside," the analyst said — 30-percent quarter-over-quarter.

Additional growth came from mobile, gaming and automotive, according to KeyBanc. 

DRAM contributed 71 percent of overall revenue and 66 percent of the gross margin due to high demand and tight supply, Twigg said. NAND accounted for 25 percent of revenue and 47 percent of tthe gross margin.

A sequential drop in NAND gross margin was due to lower pricing, as industry NAND supply ramps in the first half of the year.

Given Micron's efforts to close the gap with SAMSUNG ELECTRONIC (OTC: SSNNF) and expand its footprint in data centers by providing both flash-based products and complete data storage solutions, KeyBanc sees the company benefiting from higher-than-industry growth.

"We anticipate positive long-term memory trends based on expanding adoption of both DRAM and NAND," Twigg said. 

KeyBanc raised its estimates moderately, citing Micron's guidance and bullish demand commentary.

Although KeyBanc expects pricing pressure for NAND through the calendar second and third quarters, and potential DRAM price declines in late 2018 and early2019, it projects very strong overall demand as the cloud build-out continues.

The Price Action

Micron Technology shares were up 126 percent over the past year until Thursday.

The stock was falling 2.61 percent to $57.38 after the open Friday. 

Related Links:

Analyst's View On Micron Could Be A Good Contrarian Signal Ahead Of Earnings

Vetr Crowd Upgrades Micron

Latest Ratings for MU

DateFirmActionFromTo
Oct 2018BarclaysMaintainsOverweightOverweight
Oct 2018SusquehannaDowngradesPositiveNeutral
Sep 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight

View More Analyst Ratings for MU
View the Latest Analyst Ratings

Posted-In: DRAM KeyBanc Capital Markets NAND Weston TwiggAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (MU + SSNNF)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
JBLGoldman SachsUpgrades0.0
IMOBarclaysUpgrades0.0
JRVRKeefe Bruyette & WoodsDowngrades40.0
ADMPB. Riley FBRDowngrades2.5
EAFVertical GroupDowngrades9.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

When Disaster Strikes, It Pays To Be Prepared To File A Homeowner's Insurance Claim

Checking In On The Energy Sector Ahead Of Q1 Earnings