Analyst Ian Ing of MKM Partners emphasizes his bullish outlook of Micron Technology, Inc. (NASDAQ:MU) following its 20mn ramps and ASP stabilization. Below, Ing discusses several business developments that are contributing to his positive outlook of one of the world’s leaders in memory and semiconductor technology.
The analyst warns that Micron’s DRAM stabilization, a memory chip used in computers and smartphones, may take longer than expected. Micron is the last remaining U.S. maker of these chips with Samsung and Hynix drawing back their spending on DRAM CapEx this year. Micron is trying to complete a buyout of Inotera, a company whose outputs account for 35% of Micron’s DRAM production. The new deal will allow Micron to enjoy complete financial and operational benefits of Inotera’s business. The analyst expects Micron’s commentary this quarter regarding its DRAMS to be more conservative while it continues to complete the buyout of Inotera.
Ing expects the market to react to Micron’s NAND positively. The switch to 3D NAND has brought lower prices and “SSD demand elasticity in client and enterprise applications.” Micron’s shift to 3D NAND is expected at the end of CY16. The analyst is now “more constructive on NAND supply-demand in the August quarter.” He also increased his DRAM August quarter growth to 25% after the 20nm output crossover.
Ing maintains a Buy rating with a $19 price target for MU, marking a 55% increase from current levels. Ing has a success rate of 60% with an average return of 12% per recommendation, according to TipRanks.
Out of the 26 analysts who have rated the company in the past 3 months, 73% gave a Buy rating, 15% gave a Hold rating and 12% gave a Sell rating. The average 12-month price target for the stock is $14.83, marking a 21% upside from current levels.