Close

Micron (MU), Tsinghua Could Work Together in Other Ways Besides Merger - Deutsche Bank

July 20, 2015 3:39 PM EDT
Get Alerts MU Hot Sheet
Price: $93.78 +0.57%

Rating Summary:
    43 Buy, 9 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 20 | Down: 14 | New: 22
Join SI Premium – FREE

Deutsche Bank maintained a Buy rating on Micron Technology (NASDAQ: MU) with a price target of $28. Earlier shares declined after Reuters reported that Micron told Tsinghua a deal isn't possible due to regulator concerns. In the view of analyst Sidney Ho, while a potential deal may get blocked, shares remains undervalued and the two sides could work together in other ways.

"MU’s shares were down ~5% as Reuters reported that Micron believes a potential acquisition by China’s Tsinghua Unigroup is not possible due to security concerns. Specifically, MU believes the Committee on Foreign Investment in the United States (CFIUS) will likely block the deal. CFIUS reviews cross-border deals to ensure they do no not compromise national security. Furthermore, according to Reuters, MU has not received a formal offer from Tsinghua as of the end of last week, but Tsinghua had communicated interest to Micron. When we reached out to Micron, the company said it did not make those comments," said Ho.

"As we wrote last week, we believe the purported offer price of $21 per share by Tsinghua is not nearly sufficient for Micron’s board. Even if the price is higher, the deal will likely be met with increased scrutiny from the U.S. Government. That said, we believe it is still possible for the two entities to work together in other ways, e.g. setting up fabs in China," continued the analyst.

Ho added, "The lack of an official bid will likely put pressure on the stock, which was up ~15% last week, but we continue to believe MU’s shares are undervalued as best exemplified by our $28 price target, which assumes an improvement in the DRAM market and a successful ramp of 3D NAND. As such, we reiterate our Buy rating."

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 $20.12 yesterday.



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Analyst EPS View

Related Entities

Deutsche Bank, Definitive Agreement