real-time news and commentary for investors
Friday, Oct 11
Micron investors take profits as sell-side duels
- With shares up 191% YTD going into the report, Micron (MU -8.6%) investors took profits in response to the company's FQ4 beat (I, II) and mixed FQ1 pricing guidance. Shares trade at a little over 8x FY14E EPS after factoring net debt.
- Wells Fargo, which cut shares to Underperform , only sees Micron earning $1.24/share in FY15 (consensus is at $2.43). The firm is concerned about DRAM/NAND pricing volatility, high capex needs, and historical profitability swings Micron has been subject to. In spite of the downgrade, Wells has raised its valuation range to $14-$17.
- Bernstein is more upbeat. The firm has lifted its PT to $24 from $20, and is encouraged by Micron's CC remarks about memory supply constraints and expectations for controlled DRAM and NAND bit supply growth (previous). Fresh DRAM shortages are predicted, something Bernstein expects will "impact future contract discussions."
- Jefferies lifted its PT to $30 from $25. "Similar to consolidation in other industries such as HDDs, we believe the structural changes that occurred in industry DRAM supply over the last year, are permanent." Roth ($21 PT) likes Micron's DRAM mix, which is skewed towards non-PC applications post-Elpida. But MKM ($19 PT) is worried growth in NAND usage per smartphone is slowing.
- Rival SanDisk (SNDK -0.1%) closed near breakeven. Stifel hiked its PT to $75 from $70, while forecasting improving ASPs and margins.