Micron Technology, Inc. (NASDAQ:MU) has been spurring interest on Wall Street as its earnings announcement approaches this Thursday, June 25th after market close. Investors have fallen in line to question Micron due to concerns over DRAM supply, consequently creating an atmosphere of volatility. The company has stated in its own guidance that its numbers will improve as the year progresses.
Micron Technology works together with its subsidiaries to provide semiconductor solutions worldwide. The company has faced a tough year with share prices down 30% so far. Shares have fallen 15% alone since Micron released its last earnings report on April 1st.
Fluctuations in the price of DRAM memory chips seem to be heavily correlated to the movement in Micron’s share price. Some of this price fluctuation is due to the decreasing popularity in personal computers. Since 2011, DRAM prices have been on the decline as competition has increased in the semiconductor industry. Investors fear further DRAM prices will decrease as supply remains in excess.
On Thursday, June 25th, the company is expected to post earnings of $0.58 per share and $3.92 billion in revenue. This is down from $0.79 earnings per share and $3.98 billion in revenue year-over-year.
Nevertheless, investors seem to remain positive on Microns future.
Most recently, Timothy Arcuri of Cowen & Co. initiated coverage on Micron with an Outperform rating and a $34 price target on June 22nd. According to Smarter Analyst, Arucri believes that Micron “is still in very early innings of a multi-year transformation with respect to execution, partnerships, and market dynamics.” Despite the remaining risk surrounding the PC market, the analyst sees more “upside, sustainability, and optionality to margins” in Micron compared to its peers.
Timothy Aruci has a 59% overall success rate recommending stocks with a +16.3% average return per rating.
According to Smarter Analyst, Sujeeva De Silva of Topeka Capital upgraded Micron from a Hold to a Buy on June 19th, while raising his price target from $30 to $34. De Silva notes his revised price target “represents a potential upside of 39% from where the stock is currently trading. The increase rating and price target come after hosting an investor site visit for institutional investors at the company’s facility.”
De Silva stresses that Micron’s investors appear to be encouraged by three factors. First, he notes, “outsized DRAM cost per bit improvement relative to competitors.” Second, he continues, “steady TLC 3D NAND progress” that can spur high demand. Lastly, the analyst comments on Micron’s continued commitment to capital returns while maintaining a competitive capital returns (CAPEX) level. CAPEX are expenditures altering the future of the business.
Sujeeva De Silva has a 70% success rate recommending stocks and a +31.9% average return per recommendation.
Jefferies analyst Sundeep Bajikar maintained a Buy rating with a price target of $40 on June 18th. Sundeep stated, “DRAM stabilization may be witnessed in the back half of the year.” Weaker than expected PC demand may be the cause of EPS estimates being cut in the near term. However, the analyst continued, “our checks in Korea suggest investors are likely to find incremental evidence of rational supply-side behavior in 2H15, reinforcing our secular investment thesis driven by Moore Stress and industry consolidation.”
The “resilience of Micron’s EPS power” will leave investors happily surprised over the next year, according to Bajikar’s expectations.
Overall, Bajikar has a 67% success rate recommending stocks, earning an average return +25.5% per recommendation.
According to the analysts polled by TipRanks, 14 recommend a Buy rating on Micron, 2 recommend a Hold, and 3 recommend a Sell. The analyst consensus on Micron is Moderate Buy with an average price target of $35.61. This shows a 45% potential upside from where Micron Technology, Inc. is currently trading.