Micron Technology (MU)

[chmcnfunds]

Cuts price to $32, but retains BUY (I'll take):

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Micron Technology, Inc. (MU) Price Target Lowered By Deutsche Bank On Weak DRAM Pricing

Deutsche Bank lowered its price taraget for Micron Technology stock from $34 to $32, while reiterating a Buy

By: LARRY DARRELL
Published: May 20, 2015 at 9:37 am EST

Deutsche Bank lowered its price target on Micron Technology, Inc. (NASDAQ:MU) stock from $34 to $32, while retaining a Buy rating, in a sell-side report published on Wednesday. The decrease in the price target is largely driven by weakness in DRAM pricing through June.

The firm lowered its estimates to reflect continued PC weakness. However, the firm also acknowledged that the magnitude of the dynamic random access memory (DRAM) price drop is larger than earlier anticipated.


Moreover, Deutsche Bank’s most recent round of proprietary checks suggests that DRAM price negotiations remain challenging in May, and the weakness will likely continue till June, given PC demand is still soft, and potentially stalled ahead of the Windows 10 launch.

Inventory at distributors and PC original equipment manufacturers (OEM), appears to be high. For Micron, the sell-side firm anticipates that the company may have held less PC DRAM inventory than previously guided, due to rapidly eroding DRAM prices.

Deutsche Bank research analyst, Sidney Ho, is also projecting some price pressure in the server DRAM market, especially for DDR3, while also lowering its fiscal third quarter (3Q) earnings per share (EPS) estimates from $0.60 to $0.53 assuming DRAM average selling price is down 12% quarter-on-quarter (QoQ). The firm also lowered its calendar year 2015 (CY15) EPS forecast from $3.08 to $2.70 and CY16 EPS forecast from $4 to $3.70.

Mr. Ho further added that, despite weaker average selling prices (ASP) in the near-term, he believes demand will strengthen, starting in July, attributed by increased demand for PCs, mobiles, and servers. The firm has also seen signs that the PC supply chain is willing to build some inventory at low DRAM prices. On the supply chain side, Mr. Ho continues to believe suppliers are acting rationally, with a slight shift in market share Micron to Samsung this year.

Analysts polled by Bloomberg indicate that the majority of sell-side firms are Bullish on Micron Technology’s stock. Out of 34 analysts who cover MU stock, 25 rate it a Buy and eight recommend a Hold. The 12-month consensus target price stands at $38.52, showing upside potential of 46% over the current stock price of $26.38.
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http://www.bidnessetc.com/43251-micron-technology-inc-mu-price-target-lowered-by-deutsche-bank-on-weak-dram/

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