MKM Partners Bullish on Micron (MU) Ahead of Elpida Deal Completion

March 5, 2013 10:40 AM EST Send to a Friend
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Price: $30.89 --0%

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    24 Buy, 9 Hold, 3 Sell

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MKM Partners reiterated its Buy rating and $11 price target on Micron Technology (NASDAQ: MU) as the completion of the Elpida acquisition nears.

"Limited industry supply growth has led to an improved pricing environment in DRAM and NAND despite relatively weak demand growth, which drives our baseline assumptions higher," Daniel Berenbaum said. "The accounting decision to write down Elpida assets to purchase price means there will be no write up to add to book value, but should lead to meaningful margin and EPS accretion. MU’s NAND execution has left something to be desired, and we are mildly concerned about the pending increase to net debt when Elpida closes, but with the stock at only a 15% premium to current book value, we still see significant upside potential."

The firm is assuming the Elpida acquisition will close in 3QFY13 (May), and have full impact from 4QFY13 (August). FY13 revenue/EPS estimates go to $8.0bn/($0.36) from $7.8bn/($0.54) (cons. $8.2bn/($0.52); FY14 go to $8.9bn/$0.50 from $8.8bn/$0.40 – with Elpida we see $12.1bn/$0.78 (cons. $9.8bn/ $0.48); They introduce FY15 at $9.1bn/$0.91 – with Elpida $12.4bn/$1.22 (cons. $11.0bn/$0.75).

For an analyst ratings summary and ratings history on Micron Technology click here. For more ratings news on Micron Technology click here.

Shares of Micron Technology closed at $8.40 yesterday.


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