Deutsche Bank Reiterates Buy On Micron Following In Line F4Q14 Results


In a research report released today, Deutsche Bank analyst Sidney Ho reiterated a Buy rating on Micron Tech. (NASDAQ:MU) with a $40 price target, following the company’s release of its F4Q14 results which were in line with consensus.

Ho wrote, “MU reported F4Q revs of $4.23b, in line with DBe of $4.22b and higher than consensus of $4.15b. Excluding one-time charges, overall GM improved 80bps to 35.2%. Adjusted EPS of $0.82 is lower than DBe of $0.84 (cons. at $0.81) due to slower cost improvement. DRAM revs of $2.87b (vs. DBe of $2.85b) were driven by 4% bit shipment growth and flattish ASP, roughly in line with our expectations. However, DRAM GM improved only slightly. NAND revs of $1.15b were lower than DBe of $1.20b, with 11% bit growth offset by 5% ASP decline. NAND GM declined as expected by ~200bps to 27% due to product mix but appears better than expected excluding one-time charges. On the balance sheet, inventory declined by $77m and DOI declined by 8 days.”

The analyst continued, “MU is guiding F1Q revs of $4.45-4.70b, higher than DBe of $4.39b and cons. of $4.36b. MU guided DRAM ASP QTD to be “up low single digits”, which is better than the Street had feared (down 5-10%). We believe limited industry supply growth is driving less pricing volatility across all segments. We are also encouraged by MU’s comment to focus on profitability rather than market share. The guidance implies further expansion in DRAM GM by 200-300bps. NAND GM remains under pressure but could stabilize in 1-2 quarters. Implied EPS of $0.90-$0.92 is higher than cons. of $0.86. F1Q includes 14 weeks, but we believe EPS is still higher than cons. if we normalize for a 13-week quarter. We are lowering our CY14E EPS from $3.42 to $3.38 but raising our CY15E EPS from $4.00 to $4.10 (cons. at $3.73) and CY16E from $4.50 to $4.60.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Sidney Ho has a total average return of -3.1% and a 50% success rate. Ho has a 19.4% average return when recommending MU, and is ranked #2832 out of 3321 analysts.

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