Analysts from Normura Holdings weigh in on semiconductor company Micron Technology, Inc. (NASDAQ:MU) and cyber security firm Palo Alto Networks Inc. (NYSE:PANW) following increased supply in relation to demand, and a better than expected Q1 earnings release. While one analyst is bearish, stating oversupply concerns, another is bullish due to a Q1 earnings release exceeding expectations.

Micron Technology, Inc.

Yesterday, Normura Holdings’ Romit Shah reiterated a Neutral rating on shares of Micron, while reducing the price target to $18 (from $20), as he believes that prolonged oversupply should result in weaker fundamentals through the first half of 2016.

Shah highlighted demand concerns despite opportunities in China and Intel Corporation. The analyst states that demand for the company is weak in all of its key markets, while ASP is declining. The analyst predicts a risky outlook for the February quarter due to seasonality and a high supply of DRAM, which the analyst believes would turn into oversupply extending into Q2. Despite this outlook, Shah states that MU’s assets will greatly benefit China or Intel strategically. For China, UNIS Group, a Netherlands based company involved in repair and sales of industrial electronics, had success in the NAND supply chain. Shah believes that the company will gain access to DRAM, via MU, as 30% of WW production is consumed by China. He states that “Micron is best-positioned as a supply partner” for this company. For Intel, the analyst believes that it could use both MU’s DRAM and NAND bits “to gain further in-roads in enterprise storage or re-allocate DRAM to China”, which will strengthen its relationship with the country. He also provides positive sentiment regarding long term improvements for the May quarter, which he attributes to a “more stable PC environment, stronger cost declines on 20 nmp ramp (including Inotera kicker), and a narrowing of the cost gap with Samsung.”

According to TipRanks statistics, analyst Romit Shah has a 55% success rate recommending stocks with a 7.5% average return per recommendation. As of this writing, out of the 21 analysts who have rated Micron in the last 3 months, 16 gave a Buy rating, 2 gave a Sell rating, while 3 remain on the sidelines. The average 12-month price target for the stock is $21.76, marking a 39% upside from where shares last closed.

Romit Shah Consensus

Palo Alto Networks Inc

Analyst Frederick Grieb from Normura Holdings expressed positive sentiment about Palo Alto Networks following the company’s fiscal first-quarter earnings release. The analyst reiterated a Buy rating on the stock, with a $200 target price.

The analyst states that the company’s billings for the quarter, $338 million, greatly surpassed his estimates of $331.9 million, causing him to raise his FY16 revenue estimates. He continues that management guidance falls between $314 and $318 million for the next quarter, although the high end of this remains conservative given the company’s history. Related, management predicts 22-25% operating margin by the end of the year. Based on these positive Q1/2016 results, specifically the 61% billing growth y/y, the analysts expects “strong growth and operating margin expansion” from the company. Grieve also mentions that this growth reflects positively for the entire security software market, specifically indicating a strong spending environment. The analyst concluded, “We remain positive on Palo Alto as the company has product offerings that are consistently well rated in our checks, and the company has shown a consistent ability to take share.”

Overall, analyst Frederick Grieb has an 88% success rate recommending stocks with an average return of 27.9% per recommendation. According to TipRanks’ statistics, out of the 26 analysts who have rated PANW in the last 3 months, 22 gave a Buy rating while 4 remain on the sidelines. The average 12-month price target for the stock is $204.48, marking a 12% upside from where shares last closed.

As of this writing, out of 27 analysts polled by TipRanks in the last 3 months, 23 recommend to Buy Palo Alto, while 4 suggest to Hold the stock. The average 12-month price target on the stock is $205.83, marking over a 12.93% potential upside from where Palo Alto.