Analysts are weighing in today on memory chip giant Micron Technology, Inc. (NASDAQ:MU) and wireless chip giant QUALCOMM, Inc. (NASDAQ:QCOM). Here’s a quick roundup of today’s brokerage notes on MU and QCOM.
Micron Technology, Inc.
With Micron preparing to release fiscal 2016 first quarter financial results after the market close on December 22, Needham analyst Rajvindra Gill is lowering his near-term estimates on the company to account for lower PC DRAM gross margins.
Gill explained, “Given the slew of negative PC data points, this should not come as a surprise. What we find surprising is MU’s YTD stock performance (-18% vs. + 3% SOX). We believe the stock is oversold and at current price levels represents an attractive entry point. We expect gross margins will improve markedly in the C2H15/ CY16 driven by higher TLC NAND mix, higher mobile DRAM pricing, DDR4 transition, new Inotera agreement positively affecting GMs in 2016 and tight DRAM supply.”
“PC DRAM pricing has declined ~20% during the past several months ($25 to $20) as PC OEMs are sitting on excess inventories and have exerted some pricing pressure over the DRAM suppliers. As a result, we believe MU’s PC DRAM margins could be under pressure for the February and May quarters. We note that PCs are the highest gross margin segment for the company,” the analyst added.
In closing, Gill reiterated a Strong Buy rating on shares of Micron, with a price target of $60, which implies an upside of 319% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Rajvindra Gill has a yearly average return of 16.2% and a 55.4% success rate. Gill has a -22.9% average return when recommending MU, and is ranked #50 out of 3616 analysts.
Out of the 34 analysts polled by TipRanks, 26 rate Micron Technology stock a Buy, 5 rate the stock a Hold and 3 recommend a Sell. With a return potential of 63%, the stock’s consensus target price stands at $23.31.
Brean Capital analyst Mike Burton reiterated a Buy rating on shares of Qualcomm, with a price target of $67, after the company reported the outcome of the strategic review into its corporate and financial structure and raised its FQ1 guidance. In trading Tuesday the shares rose 2.54% to close at $48.02.
Burton wrote, “Overall, the company’s Board of Directors unanimously decided to maintain the status quo as the best option for shareholder value. The company also expects FQ1 earnings to come in at the high end of guidance on stronger-thanexpected 3G/4G ASPs, and better OPEX control from previously announced cost reductions. We are adjusting our estimates to reflect the updated guidance but are taking down our forward revenue estimates to account for a slower Apple environment heading into CY16. We expect some choppiness going forward as the Street’s numbers look a little high given our expectations for what the 1H16 will look like. However, we think the stock is compelling at 12.9x our CY17 EPS estimate of $5.20.”
According to TipRanks.com, analyst Mike Burton has a yearly average return of 11% and a 55.3% success rate. Burton has a -18.3% average return when recommending QCOM, and is ranked #263 out of 3616 analysts.
Out of the 15 analysts polled by TipRanks in the last 3 months, 8 rate Qualcomm stock a Buy, while 7 are neutral on the stock. With a return potential of nearly 34%, the stock’s consensus target price stands at $64.25.