Micron Looks to Flex NAND Cost Leadership Upper Hand
One bull says based on his checks, Micron Technology, Inc. (NASDAQ:MU) is gearing up for SATA interface solid state drive (SSD) launch come the back half of this year. If so, Micron could have first-mover advantage here.
Not only is the drive leaning on juiced up three-dimensional (3D) quadruple-level cell (QLC) flash memory for Enterprise applications (which hearkens back to Toshiba’s BICS FLASH memory play in June), but the product likewise would be the first to boast the chip giant’s controller and firmware. Micron’s controller offers a dip in bill-of-materials (BOM) while magnifying cost gains, as the QLC NAND delivers inexpensive density jumps circling 33% compared to triple-level cell (TLC) flash.
This NAND flash memory drive may deliver a rise in capacity SSDs, a promising 64-layer flash sequel to the 5100 series. The design is primed to sharpen consistency, power efficiency, throughput, as well as densities. Micron’s line of drives could prove compelling to read-intensive write once, read many (WORM) applications and workloads.
Susquehanna analyst Mehdi Hosseini believes the “QLC SSD launch changes narrative to cost leadership & system level solutions.”
In fact, Hosseini wagers that as the first-to-market with QLC Enterprise SSDs, Micron is highly anticipated to bring to the table “NAND cost leadership advantages while driving share gains.”
As such, the analyst reiterates a Positive rating on MU stock with a $60 price target, which implies a close to 11% upside from current levels. (To watch Hosseini’s track record, click here)
“We remind investors this would presumably make MU the first major storage vendor to bring QLC-based SSDs to market. In this context, we expect the above to help change the MU narrative from a follower to one that leads in lowest NAND bit cost. Cost leadership can also enable MU to become aggressive on market share gains without sacrificing margins. Our checks also indicate that MU plans to follow up with QLC-based Client SSDs using an NVMe interface, likely a 2H18 or 1H19 event. MU will target hyperscale and cloud data center customers with its new Enterprise QLC SSDs, while the Client NVMe drives will initially be targeted at PC and commercial notebook applications. All in all, we are encouraged with the company’s progress, and believe MU remains well-positioned given its die size leadership, ongoing improvements in NAND density, and progress of both Enterprise and Client SSD product strategies,” Hosseini contends, anticipating that the company is angling to grab market share gains in getting increasingly “aggressive” on pricing.
TipRanks shows that MU has earned one of the strongest analyst consensus ratings on the Street. Based on 16 analysts polled in the last 3 months, 15 rate a Buy on MU stock while only 1 maintains a Hold. Notably, the 12-month average price target of $60.33 reflects a return potential of nearly 12% from where the stock is currently trading.
Apple Is Going to Be Just Fine Despite New Import Tariffs
How could Apple Inc. (NASDAQ:AAPL) get caught in the political fray of President Trump introducing new import tariffs on aluminum and steel? By Trump’s estimation, “trade wars aren’t so bad.” However, worthy of note, Apple imports goods produced in China. Investors fear the Chinese supplier impact in this equation of more severe trade blocks.
GBH Insights analyst Daniel Ives approaches these tariff concerns and prospective trade wars largely unfazed.
In a ‘worst case’ picture, production expenses for Macs and iPhones will see a $50 million yearly rise, bets the analyst, taking under account the amount of steel and aluminum in the tech titan’s product family. To put it bluntly, this “is a rounding error in a given year.”
Therefore, the analyst rates an Attractive rating on AAPL stock with a $205 price target, which implies a just under 17% upside from current levels. (To watch Ives’ track record, click here)
Bottom line, “In a base case scenario, input costs would only rise $20 million to $30 million for Apple on aluminum/steel tariffs, a diminutive number. Given the tightly woven integration between Apple and Foxconn in China, we believe there is minimal risk to this relationship, cost increases, and backlash to Apple selling its iPhone devices within China (domestic competition remains a lingering worry), which is a key market opportunity for Apple over the coming years. In a nutshell, despite many yelling fire in a crowded theater on the negative impacts to some of these tech stalwarts with Apple front and center from potential tariffs and trade war backlash, we believe this is more ‘bark rather than bite’ and would be buyers of weakness on these names. While it will be a hand holding period over the coming weeks as the tariff details become better known, we see minimal impact on these tech names despite worries on the Street,” Ives concludes.
TipRanks indicates the big AAPL machine has earned enthusiasm among Wall Street, Out of 28 analysts polled in the last 3 months, 15 are bullish on AAPL stock while 13 choose to play it safe on the sidelines. With a solid return potential of 9%, the stock’s consensus target price stands at $191.52.