Needham & Company Remains Sidelined following Micron Technology (MU) Guidance Miss
Needham & Company maintained a Hold rating on Micron Technology (NASDAQ: MU) following the company's 5th consecutive guidance miss. February quarter guidance was below already muted expectations, as PC weakness does not seem to show signs of abating. Revenue guidance of $3.05B at the midpt was 12% below consensus estimates. GM% guidance of 17.5-20.0% was even weaker.
Analyst Rajvindra Gill commented, "MU issued its 5th consecutive guidance miss, as the historically weak PC market continues to weigh on DRAM ASPs, which we estimate have declined ~30% over the last 4 qrtrs. Our checks in Asia indicated ongoing PC weakness, pressure in eMCP and client SSDs that was crystallized on MU’s earnings call. Thus we cut our estimates significantly to $1.30 in FY17. We downgraded MU at $17 (10/21/15), but would avoid trying to catch this name as we see pressure on shares and further sellside estimate cuts. We do, however, believe MU's model has room for leverage if demand stabilizes, and if its technology can catch its peers. We could become more constructive in the $10-11 range and once we have determined that pricing has stabilized."
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Shares of Micron Technology closed at $14.61 yesterday.