Deutsche Bank analyst Sidney Ho shares insight on shares of Micron Technology, Inc. (NASDAQ:MU) after hosting MU’s CFO Ernie Maddock yesterday at the 2016 Deutsche Bank Technology Conference at the Wynn Las Vegas hotel.
Ho notes that the chip maker’s fourth-quarter August guidance revenues and gross margin will be circling the high end of guidance are a result of a “positive environment,” thanks to demand where PC was “less bad” and supply that did not expand “as feared.”
In addition to DRAM market improvements, Ho also notes that “better industry profitability at the trough is a sign of structural changes,” adding, “Our recent channel checks with the supply chain suggest Samsung is focusing more on protecting profitability than gaining market share.” Consequently, the analyst believes this has made it possible for the general oversupply predicament in the industry to faster recovery.
Ho believes, “Overall, the company is comfortable that its NAND business will generate reasonable improvements in profitability over the next 4-5 quarters.”
“The much improved supply-demand balance in both DRAM and NAND markets, along with Micron’s solid execution on its product roadmaps, should allow the company to continue to improve its profitability in 2H16 and 2017,” Ho concludes.
Following the conference, Ho remains bullish, reiterating a Buy rating on shares of MU with a $20 price target, which represents a 15% increase from where the stock is currently trading.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Sidney Ho is ranked #277 out of 4,151 analysts. Ho has a 67% success rate and yields 11.0% in his annual returns. However, when recommending MU, Ho loses 3.1% in average profits on the stock.
TipRanks analytics exhibit MU as a Buy. Based on 21 analysts polled in the last 3 months, 16 rate a Buy on MU, 4 maintain a Hold, while 1 issues a Sell. The 12-month average price target stands at $18.35, marking a 6% upside from where the shares last closed.