Positive Street commentary and a solid FQ2 beat haven't been enough to keep Micron (MU -2.6%) from joining a major tech selloff. SanDisk (SNDK +0.3%), on the other hand, is staying positive, as investors take heart in an 11% Q/Q increase for Micron's trade NAND flash sales (bit volume +35%, ASP -18%).
"Memory continues to be in the early stages of a structural re-rating driven by slowing supply growth and improving demand mix," writes Credit Suisse, reiterating an Outperform and $30 PT. The firm notes server DRAM sales rose 70% Y/Y and expects enterprise memory demand to more than double due to strong demand for (DRAM-intensive) analytics applications.
The firm does note Micron's gross margin fell short of its estimates, and wants "a more clear roadmap for NAND GM improvement." Micron's current NAND GM (in the high-20s range) trails an industry average of 40%-45%. Nonetheless, CS forecasts $5 in sustained EPS down the road.
Sterne Agee (Buy, $30 PT) likes Micron's FQ3 guidance for moderate DRAM and NAND ASP declines even though Hynix's fire-damaged Wuxi, China fab is now fully online. It sees mobile DRAM and SSD demand driving upside.
Shares are still up over 4x from their fall 2012 lows.