Micron Technology (MU): Rosenblatt Dismisses UBS ‘Sell’ Call

Look at a list of the analysts that cover Micron Technology (NASDAQ:MU). It includes 17 analysts with ‘buy’ ratings and four fence sitters with neutral or hold ratings.

Now you can add a ‘sell’ to the list. UBS analyst Timothy Arcuri initiated coverage on the chip giant with a Sell rating and price target of $35.00.

Investors seemed concerned by the recommendation, sending MU shares tumbling nearly 9% in the past two days.

However, at least one analyst has come out defending the stock today. Rosenblatt analyst Hans Mosesmann wrote: “MU shares were under pressure yesterday on a competitor’s call of a conventional DRAM end of cycle driven by ~170K wpm incremental capacity in 2018 and 2019 (implying mid-single digit increases in wafer capacity for both years). Let’s start with our view that DRAM bit supply growth of ~20% for 2018 hasn’t changed based on our industry discussions, and we estimate also at this level for 2019.”

“Mid-single digit wafer additions per year very likely only replacing lost throughput. We believe it would take high-single or even double digit yearly increases in wafer supply to alter the equation to oversupply for the next couple of years. Using historical DRAM cycles during the golden age of Moore’s Law (ignoring bits/wafers), is not practical in determining an imminent DRAM down-cycle going forward in our opinion,” the analyst continued.

As such, Mosesmann rates MU a Buy with a price target of $85.00, which implies a potential upside of 75% from Friday’s closing price.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Hans Mosesmann has a yearly average return of 9% and a 52% success rate. Mosesmann has a 22.4% average return when recommending MU, and is ranked #644 out of 4767 analysts.