Analysts Signal Strength in Micron Technology, Inc. (MU) and Apple Inc. (AAPL); Here’s Why


Mizuho and Credit Suisse are providing bullish perspectives on two leaders of the tech-verse: Micron Technology, Inc. (NASDAQ:MU) and Apple Inc. (NASDAQ:AAPL). One top analyst is angling for Micron to have a more impressive performance this quarter around, particularly in terms of fourth fiscal quarter guidance, setting the chip giant up for a solid back half of the year. Meanwhile, another analyst is calling for upside to iPhone production forecasts after Asia data has indicated the tech giant is in for a home run for its highest-costing iPhone model yet. Let’s explore:

All Signs Point to a Stronger Second Half of the Year for Micron

Micron is set to deliver its third fiscal quarterly print at the end of the month, and top analyst Vijay Rakesh at Mizuho sees this as a step up from the second fiscal quarter, where trends were not as robust. Therefore, the analyst reiterates a Buy rating on shares of MU with a $35 price target, which represents a just under 14% increase from where the stock is currently trading.

For the third fiscal quarter of the year, the analyst projects revenue to hit $5.4 billion, EPS to reach $1.48, and GM of 46.1%, compared to consensus expectations calling for $5.4 billion in revenue, $1.53 in EPS, and GM of 46.3%. For the fiscal year of 2018, the analyst calls for revenue of $23.0 billion, EPS of $5.45 (more bullish than consensus expectations of $5.14), and GM of 42.0%.

The set-up for Micron heading into the print looks encouraging to Rakesh, who opines, “Despite the expected iPhone delays, the AugQ could see upside from a bigger pre-build and OEM commentary that points to continued tightness. While MayQ demand trends have been weaker with PC, softer China handsets and an iPhone 8 pushout, we believe the setup for MU in the AugQ is better as it could benefit from a stronger build with the pushout.”

Additionally, “Near-term, DRAM stable but improving PC/Handset and 1x nm DRAM ramp position it well. While DRAM spot pricing is down ~4% for the MayQ […] we believe overall DRAM contract was mostly stable,” continues the analyst.

Rakesh concludes, “With DRAM and NAND pricing mostly stable we expect an inline MayQ but an upside AugQ guide, driven by a stronger build season into the AugQ. We believe continued supply tightness, major handset ramps and PC strength should point to a stronger 2H17. Reiterating our Buy rating and $35PT as MU continues to trade at, we believe, a conservative 6-7x F18E consensus EPS.”

Vijay Rakesh has a very good TipRanks score with a 71% success rate and a high ranking of #39 out of 4,574 analysts. Rakesh yields 29.0% in his annual returns. When recommending MU, Rakesh garners 52.7% in average profits on the stock.

TipRanks analytics exhibit MU as a Strong Buy. Out of 20 analysts polled by TipRanks in the last 3 months, 17 are bullish on Micron stock, 2 remain sidelined, and 1 is bearish on the stock. With a return potential of 23%, the stock’s consensus target price stands at $38.33.

Apple Production Trends Look Strong in Asia

Credit Suisse analyst Kulbinder Garcha is chiming in on Apple’s production for its forthcoming iPhone 8 launch, with analysis of trends from the analyst’s team in Asia suggesting upside could be in the tech giant’s future. In reaction, the analyst reiterates an Outperform rating on AAPL with a price target of $170, which represents a 17% increase from where the shares last closed.

When looking at his full year iPhone forecast expecting the giant to bring in 229 million units, the analyst now anticipates 5% upside as a real possibility, thanks to new production data coming to light.

“First, our Asia team has noted a slight increase in the overall iPhone production in 2H2017 to 156mn from 145mn, driving the full year production to 241mn from the previous build data of 232mn […] Second, the production data indicates 112mn iPhone 8 builds (up 13% yoy) in 2H2017, which implies a material upside to our sell-in unit estimate of 90mn. Third, we see two sources of upside for our ASP assumptions – mix of the OLED model and pricing. While the mix of the OLED phone builds has come down slightly to 56% from 60% of the previous check, it is still meaningfully ahead of our assumption of 45%. In addition, we note that Apple has historically raised iPhone prices along with key updates. Given its affluent user base, a significant feature upgrade, limited price elasticity shown so far, as well as Samsung’s higher pricing points of the S8 devices, we believe our ASP assumptions could prove conservative at $676/$704 for CY17/CY18,” surmises Garcha.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Kulbinder Garcha is ranked #540 out of 4,574 analysts. Garcha has a 55% success rate and realizes 7.4% in his yearly returns. When recommending AAPL, Garcha earns 19.7% in average profits on the stock.

TipRanks analytics show AAPL as a Strong Buy. Based on 31 analysts polled by TipRanks in the last 3 months, 26 rate a Buy on Apple stock while 5 maintain a Hold. The 12-month average price target stands at $165.48, marking a 14% upside from where the stock is currently trading.