RBC's Doug Freedman has downgraded Micron (MU -3.5%) to Sector Perform, while arguing the DRAM/NAND flash vendor might fail to achieve the $3+ in annual EPS bulls are hoping it will eventually produce. Micron's FY15 (ends Aug. '15) EPS consensus is currently at $2.28, but some estimates are much higher.
Freedman, who had been bullish on Micron for a long time, is worried about softening growth in mobile (~25% of Micron's revenue post-Elpida), the gross margin pressure placed by Micron's reliance on JVs (with Intel, Nanya, etc.), pending increases in DRAM and NAND supply, and the fact Micron's fabs (the company has seven of them spread out between five companies) are less concentrated than those of Samsung and SK Hynix.
Shares rallied earlier this week after Drexel Hamilton provided an upbeat note regarding DRAM and NAND pricing.
NAND rival SanDisk (SNDK -0.8%) is down slightly, but still close to its 52-week high of $70.93.