Nomura Securities Downgrades Micron Technology (MU) to Reduce

Nomura Securities downgraded Micron Technology (NASDAQ: MU) from Neutral to Reduce with a price target of $8.00 (from $12.00).

Analyst Romit Shah commented, "The stock is down 60% yoy (S&P is down - 3% through that same 1-yr time-frame) and yet the Street is highly positive. The prevailing view has been that the DRAM industry is structurally positioned to maximize profits; however, we’ve been more negative on Micron over the last twelve months, arguing that Samsung’s widening technology lead would result in share loss, higher capital spending and lower free cash flow."

He added, "Last week, we met with every major DRAM supplier in Taiwan and Korea. The focus is not maximizing profits. It’s market share. DRAM supply is growing and there seems to be no intention to cut production. The implication is lower ASPs, which we don’t believe is factored into expectations for a strong margin recovery in 2H-16."

"Our belief is that Micron will continue to underperform until the DRAM industry cuts production. Our new target of $8 is based on a multiple of 10x CY17 EPS or 0.7x book."

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 $11.88 yesterday.

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