This morning, Micron (NASDAQ:MU) announced that two of its Chinese subsidiaries have received a preliminary injunction notice from Fuzhou Intermediate People’s Court, Fujian Province, China. The injunction enjoins Micron’s Chinese subsidiaries from manufacturing, selling, or importing certain Crucial and Ballistix-branded DRAM modules and solid state drives in China. The news has come up as the sign of relief for investors, as these specific products constitute only slightly more than 1% of MU’s total revenue.
In reaction, Micron shares are up nearly 3% to $52.83 in Thursday’s trading session.
RBC Capital’s top analyst Amit Daryanani commented, “While we expect the stock to react positively to the minimal impact arising from these injunctions, we think it highlights the risks from ongoing US/China trade tensions to the industry. Net net, our bullish bias reflects our belief that while we don’t think cycles are done, we do think they are going to be inherently more muted and MU is positioned to generate positive EPS and FCF under most down-cycle scenarios.”
“For Aug-qtr we estimate revenue/EPS of $8.2B/$3.30 vs. Street at $8.0B/$3.16. For FY19E our estimates stand at $31.9B/$11.24 vs. Street at $31.5B/$10.92. MU guided Aug-qtr revenue to be $8.00-$8.40B range, gross margins of 59%-62%, operating expense of $725-$775M, and EPS of $3.23-$3.37,” the analyst added.
Bottom line: Daryanani reiterates an Outperform rating on Micron shares, with a price target of $83, which represents a potential upside of 57% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Amit Daryanani has a yearly average return of 25.2% and a 78% success rate. Daryanani has a -11.1% average return when recommending MU, and is ranked #36 out of 4826 analysts.
How does Daryanani’s bullish bet measure up against the word of the Street? Quite on point, it seems, considering TipRanks analytics exhibit MU as a Strong Buy. Out of 22 analysts polled in the last 3 months, 18 are bullish on Micron stock while 4 remain sidelined. With a return potential of 56%, the stock’s consensus target price stands at $82.25.