By Carly Forster
Micron (NASDAQ: MU) is best known for producing semiconductor devices, including DRAM, SDRAM, flash memory chips, and SSDs. The company’s production lines have been transitioning to new-generation 20-nanometer circuitry in an effort to improve performance using less power, reduce the size of its chips, and lower production costs. On March 17th, the technology company announced a new line of “ultra” memory products intended to enable next-generation cars.
On March 17th, RBC Capital Markets analyst Doug Freedman maintained an Outperform rating on Micron, but slashed his price target from $44 to $40. The cut in Freedman’s price target stems from his admission of being “overly aggressive in assuming that the 20-nanometer transition would be faster and smoother than expected.” Freedman now expects back-end assembly and test costs to be higher in order to lower Micron’s gross profit margin.
In regards to Micron’s new “ultra” memory products, Freedman noted “Micron is a longer-term play on the favorable changes in the memory industry given limited risk of oversupply and stronger demand cycles… While Micron could be viewed as a restructuring story in the near term given its many moving parts, we believe that the company’s effort to improve Nand quality now depends on TLC (triple level cell)/3D Nand in the back half of 2015.”
Freedman has rated Micron 26 times since February 2011. Although he only has a 43% success rate recommending the stock, he also has a +11.5% average return per MU recommendation. Overall, the analyst has a 75% success rate recommending stocks and a +24.2% average return per recommendation.
Similarly on March 17th, Needham analyst Rajvindra Gill maintained a Buy rating on Micron with a $60 price target. Gill noted, “We believe the stock is oversold and at current price levels represents an attractive entry point. We expect gross margins will improve markedly in the C2H15/ CY16 driven by higher TLC NAND mix, higher mobile DRAM pricing, DDR4 transition, new Inotera agreement positively affecting GMs in 2016 and tight DRAM supply. As such, our FY16 Non-GAAP EPS of $4.75 and our $60 PT remain unchanged.”
Gill has rated Micron 16 times since December 2013, earning a mere 25% success rate recommending the company and a +1.8% average return per MU recommendation. Overall, the analyst has a 63% success rate recommending stocks and a +21.4% average return per recommendation.
On average, the top analyst consensus for Micron on TipRanks is Moderate Buy.
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Carly Forster writes about stock market news. She can be reached at [email protected]