Micron Technology (MU): Buy On Weakness - Nomura
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Nomura Securities analyst, Romit Shah, reiterated his Buy rating on shares of Micron Technology (NASDAQ: MU) and recommend investors use any weakness to add to positions.
The analyst forecasts revenues of $3.2b, gross margin of 19% and EPS of -$0.10 for the August period. Momentum should continue in the November period with estimated DRAM sales to increase 17% to $2.47b. This is driven by 15% bit growth and 2% growth in asps. Combined with modest (low- to mid-single-digit growth) in NAND, this drives FQ1 revenues to $3.6b (+13% qoq), versus consensus of $3.4b.
Investors should contemplate that Specialty DRAM, which accounts for 25-30% of total DRAM shipments, has not seen the same level of pricing strength as PC, server and mobile. In addition, Micron’s NAND business continues to face headwinds. Additionally, the company’s floating gate 3D competitiveness is weak and thus far is really only selling in the channel, which carries lower asps than SSDs.
No change to the price target of $23.
Shares of Micron Technology closed at $17.44 yesterday.
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