Needham & Company Downgrades Micron Technology (MU) to Underperform
Needham & Company downgraded Micron Technology (NASDAQ: MU) from Hold to Underperform amid falling earnings.
Analyst Rajvindra Gill commented, "We downgrade MU to Underperform (from Hold) and reduce our ests heading into Wed night's earnings call. We continue to see a weak PC market adversely affecting DRAM pricing, and checks pointing to vulnerabilities in mobile DRAM. We believe a similar dynamic could be developing in NAND. Net, we believe the Street's revenue ests calling for 12% Y/Y sales growth in FY17 after a 19% Y/Y decline in FY16 are overly optimistic, along with price targets of $10+. Moreover, with our revised ASP and unit projections, we forecast MU will incur a negative $1.2B and $0.6B of FCF in FY16 and FY17, even after factoring in the Inotera acquisition. With MU’s peak fwd P/E at 10x, we forecast $0.30 and $0.75 of NG EPS in FY16 and FY17, respectively. We believe something closer to ~9x P/E would represent a fair value for shares"
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Shares of Micron Technology closed at $10.38 yesterday.