Seeking Alpha

Micron slumps on RBC downgrade; SanDisk edges lower

  • 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.
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Comments (5)
  • Kenpogi
    , contributor
    Comments (56) | Send Message
     
    Opportunity to buy pre-ER.
    MU will definitely beat estimates by wide margin.
    3 Jan 2014, 12:37 PM Reply Like
  • ScottArt
    , contributor
    Comments (34) | Send Message
     
    Thanks for the buying opportunity, Mr. Freedman!
    3 Jan 2014, 01:05 PM Reply Like
  • hneumann
    , contributor
    Comments (632) | Send Message
     
    Kenpogi, I think the guidance is more important than beating consensus in case of MU. It just needs a clear and positive guidance for 2014 to reach a record high. Nevertheless I expect shareprice to be close to $ 22 before ER. The expectations are very high and may well be met.
    3 Jan 2014, 02:58 PM Reply Like
  • patt2374
    , contributor
    Comments (681) | Send Message
     
    It is all about beating up on MU this last 2 weeks which means, based on history with other stocks, the worm is about turn.
    3 Jan 2014, 07:30 PM Reply Like
  • fanebrp
    , contributor
    Comments (278) | Send Message
     
    Why did Dough F. do his thing 3 bus. days before earnings ? Has he been a sleep-in ? I think he knew... what do you think ? Maybe he's lying (?)
    4 Jan 2014, 11:28 AM Reply Like
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