RBC Capital Defends Micron (MU) on 'Overblown' Reports

Yet another analyst has come out to defend Micron Technology (NASDAQ: MU) today on weakness related to reports Samsung may have at least half of next-gen AAPL handset DRAM orders and LG handset DRAM as well. In addition, there are reports Micron is currently price-aggressive. RBC Capital Doug Freedman thinks the impact on MU is 'overblown."

"We think the Street expectation is that the "6S" AAPL smartphone could ship 1.5-2GBs (or more) of DRAM in the smartphone, so not only is MU losing unit volume, they also experience less of the impact from increased content," Freedman comments. "AAPL will be at 1GB DRAM/phone for most of the year as they will sell 6/6+ until late September. We estimate that AAPL could sell 60-70mil "6S" units from October-December. So that means that if AAPL sees a 1 GB increase in DRAM and assuming 95% of units are next-gen, that is 65mil more GBs of DRAM (65mil units x 1 additional GB). Total AAPL content would be 130mil gigabytes of DRAM assuming 2GB/phone. Samsung handling "at least half" would be 65mil gigabytes of DRAM content. The magnitude of the shift does not seem to justify the decrease in stock price."

On reports MU has been price aggressive, specifically in servers, the analyst said: "We do not believe that this behavior is unusual, especially towards the end of the quarter (MU quarter-end is Feb 27-28). If there is a minor adjustment in EPS for Q1, we would not be surprised."

The firm maintained an Outperform rating and price target of $44 on MU.

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 $31.40 yesterday.

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