Rosenblatt Bets on Micron Technology, Inc. (MU) Ahead of Earnings, Remains Sidelined on Apple Inc. (AAPL) Amid iPhone 8 Concerns

What does the future hold for Micron and Apple? Analysts at Rosenblatt try to predict.


Rosenblatt analysts are weighing in today on two of the most talked-about stocks on Wall Street, Micron Technology, Inc. (NASDAQ:MU) and Apple Inc. (NASDAQ:AAPL). The analysts reflect on Micron’s much anticipated earnings, scheduled to be released this evening, and Apple’s iPhone 8 sales, which failed to impress so far. Let’s take a closer look:

Micron Technology: Earnings Preview, Expecting Beat and Raise

With Micron preparing to release fiscal fourth-quarter results today after the closing bell, Rosenblatt analyst Hans Mosesmann weighs in with his prediction.

The analyst expects a beat and raise quarter from the semiconductor giant, and believes the company’s consensus EPS for FY18 could move towards his $7.77 as the street converges on the view of an extended memory cycle driven by content and stabilized by broader mixed demand dynamics.

Mosesmann noted, “As is typical post beat-and-raise quarter prints the stock may be vulnerable to sell-the-news action tomorrow; however we would use this to accumulate the shares on upward earnings revisions, benign supply demand through 2018, and rational posture by memory players to focus on profitability.”

“Investors may also pivot on Micron’s CapEx guide for FY18 which we view will move up to $6.5-$7.0 billion (below 30% of our FY18 sales estimate), from the ~$5 billion the company will have spent in FY17,” the analyst added.

As such, Mosesmann reiterates a Buy rating on Micron shares, with a price target of $75, which implies an upside of 113% from current levels. (To watch Mosesmann’s track record, click here)

Micron has one of the best ratings by the Street. TipRanks reveals that MU has a Strong Buy analyst consensus rating with 21 back-to-back buy ratings in the last three months. Only two analysts rank MU a Hold. Meanwhile the average analyst price target of $45.68 suggests the stock still has upside potential of just over 30% from the current share price.

Apple’s iPhone 8: Early Signs Pointing to a Lack of Consumer Interest

Given a plethora of media reports highlighting muted demand trends for the iPhone 8/8 Plus, Apple’s shares have been under pressure and are now down 6% from the high on September 1.

While current industry research suggests first day iPhone 8/8 Plus sales are significantly lower than iPhone 7/7 Plus sales, Rosenblatt analyst Jun Zhang is not surprised as many Apple users could be waiting for the iPhone X. However, the analyst’s main concern is the competitiveness of the iPhone 8 model as it does not have a panel upgrade, whereas other Android phones will launch with full screen upgrades in Q4.

With respect to iPhone X, the analyst noted, “We believe the iPhone X production yield rate is around 70%, and with the metal frame issue, the production ramp might need to be pushed to December. We also believe consensus December quarter iPhone X shipments could be too high. However, we do not see it as a negative for Apple as it could bring some positive sentiment on iPhone X sales.”

As such, Zhang reiterates a Neutral rating on Apple shares, with a price target of $150, which represents a slight downside potential from current levels. (To watch Zhang’s track record, click here)

Out of the 31 analysts polled by TipRanks (in the past 3 months), 23 rate Apple stock a Buy, while 8 rate the stock a Hold. With a return potential of 13%, the stock’s consensus target price stands at $174.31.