Susquehanna Reiterates Positive Rating on Micron Technology (MU)
Susquehanna analyst Mehdi Hosseini reiterated a Positive rating and $165.00 price target on Micron Technology (NASDAQ: MU)
The analyst comments "Despite softer N-T DRAM/NAND ASP trends, increased market share in HBM and DDR5 are expected to strengthen MU's earning opportunity (into $10-$15 range). Downside risk due to competition is minimal since it would take at least a year for Samsung to fix its DRAM (1a-1c) and NAND (3xx/4xx) technologies. Stock risk/ reward profile is viewed as compelling despite N-T downside risk simply because buy-side is expecting the Feb- Q (Q2FY25) guide to fall short of consensus. Reiterate Positive rating. N-T weakness in commodity DRAM and NAND ASPs have led to a reduction in our N-T estimates for MU ahead of its Q1FY25 (Nov '24) earnings on 12/18. But, we also argue this is to a large extent dialed into the stock given the current book based valuation of <2x and FWD PE of <6x, both of which are below the last 10-yr avg of 2x and 6x, respectively. In fact, our checks last week in Asia as well as our analysis suggest MU's L-T EPS opportunity of $10-$15 has strengthened as MU is poised to gain market share in both HBM and DDR5 (server application). Investors remain concerned about Samsung "flooding" the market with inexpensive memory products. We argue the diversification of end market application particularly for DRAM is structural, helping increase the mix of higher margin value add products (that Samsung simply cannot compete with since they are falling behind in process technology), In a nutshell, Samsung's challenges can't be fixed in just a few quarters, enabling MU with market share gains in HBM and DDR5 and thus driving upside to L-T earning power."
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Shares of Micron Technology closed at $102.50 yesterday.