- Believing risk/reward is favorable following this year's plunge, Wells Fargo has upgraded Micron (NASDAQ:MU) to Outperform ahead of Thursday afternoon's FQ4 report. The firm has set a $16-$19 valuation range.
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MU +1.6% premarket to $14.28. Shares currently go for 7.4x an FY16 (ends Aug. '16) EPS consensus of $1.93 - down from $2.69 90 days ago, and below an FY15 consensus of $2.66.
- Micron fell hard yesterday as markets tumbled. Nomura and Cowen offered differing takes on whether FQ4 will act as a bottom for the company.
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Update: More details here. Wells' David Wong: "[W]e think that our $1.10 estimate for FY16 reflects a worse-than-average business environment which has been impacted by the rapid correction in DRAM prices over the last few months. These numbers suggest to us that our FY17 estimate of $1.80 might be a reasonable representation of Micron’s true normalized earnings power. Our valuation range is based on what we consider to be a modest multiple off this EPS estimate."