Analysts from Nomura and Morgan Stanley commented on semiconductor companies Micron Technology, Inc. (NASDAQ:MU) and Broadcom Ltd (NASDAQ:AVGO) with differing opinions on both. After meeting with DRAM suppliers, one analyst believes Micron is in trouble due to declining DRAM demand resulting from a market oversupply. The other analyst met with Broadcom management and cited a few reasons why he is bullish on the stock.

Micron Technology, Inc. 

Analyst Romit Shah weighed in on Micron yesterday after meeting with major DRAM suppliers in Taiwan and Korea last week. The analyst also downgraded the stock to Reduce (from Neutral) and lowered his price target to $8 (from $12) on lowered estimates.

Shah explained, “Our belief is that Micron will continue to underperform until the DRAM industry cuts production. [..] We reduce CY16 EPS from $0.62 to $0.24 (vs. cons. $0.46) and CY17 EPS from $1.12 to $0.80 (vs. cons. $1.53). We assume DRAM ASP erosion of -30% against cost declines of – 18% in 201 6. We assume DRAM ASP erosion of -21 % and cost declines of -25% in 2017.”

Shah has a 57% success rate recommending stocks with an average return of 7.4% per recommendation.Romit Shah Consensus

According to TipRanks, out of the 22 analysts who have rated the company in the past 3 months, 17 gave a Buy rating, 1 gave a Sell rating, and 4 remain neutral. The average 12-month price target for the stock is $17.23, marking a 49% upside from where shares last closed.

Broadcom Ltd 

Analyst Craig Hettenbach of Morgan Stanely weighed in on Broadcom after a meeting with top management. Hettenbach notes the earnings beat last week, marked by favorable margin guidance, and describes that most of the conversation revolved around wireless, despite the newly decreased size of the Wired Infrastructure segment following the acquisition by Avago. The analyst notes that Broadcom is his top pick in the semiconductor industry due to “attractive product cycles in Networking and Wireless,” citing a potential $1 billion in cost savings. The analyst highlights a few main points from the meeting.

First, the analyst states management’s cost saving target of $750 million. However, he believes this figure is conservative relative to his $950 million estimate. Most of the cost cutting efforts for the company revolve around R&D, as it marked 24% of sales, “suggesting plenty of room to cut.” The analyst notes that $295 million in sales have already been transferred into discontinued operations. He explains, “These businesses have a sizeable operating loss and thus the move helps eliminate a material drag on profitability.” The analyst also points to “a number of strong tailwinds to GMs” such as a $200 million synergy target in COG’s.

Next, Hettenbach  comments on demand, stating that “The decline of growth in smartphones has been well documented at this point and should trough in the current quarter.” However, the company believes the overall high end smartphone unit market is stable “and expects an increase in $ content into the second half.” Management also provided positive commentary on data centers, especially in China, noting double digit growth. The company also commented on favorable conditions in traditional enterprise. Broadcom is experiencing share gains in both HDDs and SoCs in light of a declining TAM (total available market). Finally, the analyst highlights potential growth and “integration opportunities” in set top boxes.

Another topic of discussion in the meeting was carrier aggregation (CA). While “the number of bands supported in LTE phones…has been the main catalyst for growth up until this point,” management expects CA to be the next growth driver going forward, also driving up ASPs. Management expects CA to “drive another 50% increase to the $30 range, providing support for Broadcom’s target of 20% annual growth in RF.” The analyst also comments on potential acquisitions, stating that it will most likely hold off due to the recent $36 billion Avago-Broadcom acquisition. The company believes it is best to “pause until it is deeper into the Broadcom integration” before any other major deals, although the company expressed interest in industrial and wired communications.

The analyst reiterates his overweight rating on the stock with a $182 price target.

Craig Hettenbach has a 67% success rate commenting stocks with an average return of 32.2% per recommendation. According to TipRanks, out of the 22 analysts who have rated the company in the past 3 months, 21 gave a Buy rating while 1 remains on the sidelines. The average 12-month price target for the stock is $176.57, marking a 23% upside from where shares last closed.