Nomura Securities on Micron Technology (MU); Elpida Acquisition Gets Better
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Price: $11.39 +4.30%
Rating Summary:
16 Buy, 10 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 21 | Down: 24 | New: 29
Rating Summary:
16 Buy, 10 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 21 | Down: 24 | New: 29
Trade MU Now!
Nomura Securities maintains a 'Neutral' on Micron Technology (NASDAQ: MU) price target of $8.00.
Analyst, Sidney Ho, said, "According to a Nikkei article on June 29, Micron has agreed to purchase Elpida for ¥200bn (about US$2.5bn). In addition, Micron will spend ¥100bn (about $1.25bn) to upgrade Elpida’s manufacturing facilities to increase mobile DRAM output. The total consideration of ¥300bn (about $3.75bn) is similar to what Nikkei reported on May 8."
"The article further stated that ¥140bn of the purchase price would be used to pay off Elpida’s outstanding debt of ¥420bn. This suggests that creditors will receive about 30¢ on the dollar. We believe that previously investors expected the debt payments to be in addition to the ¥200bn purchase price...This further implies that Micron will get Elpida assets for about ¥60bn (about $750mn). If true, we believe the purchase price is better than most investors have expected. At this time, it is unclear whether Rexchip’s fab is part of the purchase price."
Ho thinks this is a good fit for Micron, but says the company may have to raise additional capital. Also, weakness in NAND is a continued overhang, and his firm is staying sidelined until more evidence of improved end demand.
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 $5.72 yesterday, with a 52 week range of $3.97-$9.16.
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Analyst, Sidney Ho, said, "According to a Nikkei article on June 29, Micron has agreed to purchase Elpida for ¥200bn (about US$2.5bn). In addition, Micron will spend ¥100bn (about $1.25bn) to upgrade Elpida’s manufacturing facilities to increase mobile DRAM output. The total consideration of ¥300bn (about $3.75bn) is similar to what Nikkei reported on May 8."
"The article further stated that ¥140bn of the purchase price would be used to pay off Elpida’s outstanding debt of ¥420bn. This suggests that creditors will receive about 30¢ on the dollar. We believe that previously investors expected the debt payments to be in addition to the ¥200bn purchase price...This further implies that Micron will get Elpida assets for about ¥60bn (about $750mn). If true, we believe the purchase price is better than most investors have expected. At this time, it is unclear whether Rexchip’s fab is part of the purchase price."
Ho thinks this is a good fit for Micron, but says the company may have to raise additional capital. Also, weakness in NAND is a continued overhang, and his firm is staying sidelined until more evidence of improved end demand.
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 $5.72 yesterday, with a 52 week range of $3.97-$9.16.
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