Micron's (MU) Price Target Reduced at Pacific Crest

Pacific Crest maintained an Overweight rating on Micron Technology (NASDAQ: MU) but lowered its price target to $32.00 (from $39.00). Analyst Monika Garg cut estimates due to weakness in PC sales. However, he noted the recent sell-off accounts for negativity in Micron.

"We are reducing our F2015 estimates due to continued weakness in the PC DRAM market. We are also reducing F2016 estimates on lower DRAM margins. Lower-than expected PC demand has adversely affected PC DRAM pricing in 1H15," said Garg.

"PC DRAM pricing could stabilize on better PC demand and lower PC DRAM supply. Micron and Hynix also said that as DRAM vendors move capacity away from PC DRAM to mobile and server DRAM, PC DRAM pricing could stabilize over the next couple of months. Demand for mobile and server DRAM continues to be strong. We believe it is highly likely that Apple could move to 2GB mobile DRAM from 1GB mobile DRAM when it introduces the new iPhone later this year. Samsung has already increased DRAM content by 50% to 3GB in its Galaxy S6 devices," continued the analyst.

Garg added, "We believe the DRAM market has changed. Now with just three players instead of six or seven vendors, the remaining players should produce consistent strong free cash flow. Also, challenges in node transitions should lead to lower bit growth and hence supply/demand balance in the memory markets. Our price target of $32 is based on 10x our F2016 EPS estimate."

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 $25.02 yesterday.

You May Also Be Interested In

• Micron Technology (MU) plans to construct a $100B "Megafab" employing more than 9,000 workers in Upstate NY - Nikkei
• Costco Wholesale (COST) PT Raised to $710 at Citi
• Boston Beer Company (SAM) PT Lowered to $325 at Jefferies