Thursday Morning’s Market Insights: Micron Technology, Inc. (MU), Seadrill Ltd (SDRL), BlackBerry Ltd (BBRY)

Micron Technology, Inc. (NASDAQ:MU) is up over 7% following analyst upgrades. Analyst Mehdi Hosseini of Susquehanna upgraded the stock from Neutral to Positive, raising his price target to  $18 from $10. The analyst credits his upgrade to improving PC & Server DRAM trends, as well as improving NAND fundamentals.

He states, “Our checks over the past week suggest that pricing trends for PC & Server DRAM …are improving and actually up into 2H. Although competitors are holding inventory of mobile DRAM, MU’s mobile share loss earlier in the year is actually playing to the company’s advantage. In fact… we now maintain a positive bias on the PC & Server segments into 2H [because of] new products (i.e. 2-in-1 NB) that are scheduled for introduction in 2H should provide catalysts for some upgrade activity…PC & Servers are viewed as MU’s sweet spot.”  He continues, “Additionally, NAND fundamentals are continuing to improve, with increased prospects of a supply “shortage” by Sep Q. Although we don’t expect MU’s 3D NAND to be ready for HVM before 2017, improving fundamentals still bode well for MU’s planar NAND ASP, and thus are incremental to MU’s 2H earnings.”

Analyst Romit Shah of Nomura Securities also upgraded MU from Reduce to Buy, raising his price target to $18 from $8. The analyst credits an improvement in overall semiconductor fundamentals, such as SSDs and DRAM, as the reason for his upgrade, as well as competitors trading at higher levels.

He states, “We believe that semiconductor fundamentals are healthy or improving across several areas, including analog, SSDs, DRAM, and capital equipment. While end demand remains a mixed bag, we believe this strength could persist through the back-to-school season in Sep/Oct. Several franchise names, including AMAT, AVGO, NVDA, and TXN, are trading near highs and/or peak valuations. While we view several of these as core holdings, we believe investors should adopt a barbell strategy and own some beaten-down stocks into the second half.”

According to TipRanks’ statistics, out of the 26 analysts who have rated the company in the past 3 months, 19 gave a Buy rating, 3 gave a Sell rating, and 3 gave a Hold rating. The average 12-month price target for the stock is $15, marking an 18% upside from where shares last closed.

Seadrill Ltd (NYSE:SDRL) is up more than 2% this morning following a slight rise in oil prices resulting from the anticipated Brexit vote, set for later today. Many investors believe voters will keep the UK in the European Union due to recent poll results. As such, this will lead to a rise in “risky” assets such as oil. Many believe that if Britain votes to remain in the EU, a shift to fundamentals will occur, focusing more on supply disruptions which have so far increased prices. As of 9:00 GMT, Brent crude is up 31 cents to $50.19 a barrel while U.S futures are up 26 cents to $49.39. According to ANZ Research, “A positive one in the commodity markets continues to support prices. However, the gains remain limited as investors await the outcome of the EU vote in the U.K.”

According to TipRanks, out of the 4 analyst who have rated the company in the past 3 months, 3 gave a Sell rating while 1 remains on the sidelines. The average 12-month price target for the stock is $1.90, marking a 44% downside from where shares last closed.

BlackBerry Ltd (NASDAQ:BBRY) is up close to 2% in early trading Thursday, after the company reported Q1:17 earnings this morning. The company posted revenues of $424 million, lower than consensus estimates of $471 million, and break even earnings, compared to a consensus loss of ($0.08) per share. However, the company also posted a $670 million net loss for the quarter which includes an impairment charge of $501 million, a goodwill impairment charge of $57 million, and a $41 write-down of inventory charge.

CEO John Chen credited lower than expected sales of its first Android phone, Priv, as part of the reason why revenues came in lower than expected.  However, investors also focused on better than expected guidance, as the company predicts a 30% growth in FY2017 software and services revenue as well as FY17 PS of ($0.15) compared to a consensus loss of ($0.33) per share for FY17.

The company stated, “Our current plan calls for continued investments to expand our addressable markets and drive sustainable profitability and revenue growth. For the full fiscal year, we are on track to deliver 30 percent revenue growth in software and services. Based on a more efficient operating model, we expect a non-GAAP EPS loss of around 15 cents, compared to the current consensus of a 33 cent loss. We also expect to generate positive free cash flow for the full year.”

According to TipRanks, out of the 9 analysts who have rated the company in the past 3 months, 2 gave a Sell rating while 7 remain neutral. The average 12-month price target for the stock is $7.49, marking an 11% upside from where shares last closed.

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