Micron (NASDAQ: MU) is best known for producing many forms of semiconductor devices, including DRAM, SDRAM, flash memory, and SSDs. Micron had a decent fiscal 2014 year, posting record revenue of $16.4 billion, record net income of over $3 billion, and record free cash flow of $2.6 billion. The company’s stock price has jumped from around $6 a share two years ago to around $35 a share today.
In addition, CFO Ronald C. Foster sold 20,000 of his shares on December 9th. The shares were sold at an average price of $35.38, for a total value of $707,600.00.
However, Micron stock closed down almost 2%, at $33.35 yesterday on December 15th, despite receiving two Buy ratings from Jeffries & Co. analyst Mark Lipacis and Nomura Equity Research analyst Romit Shah.
Lipacis reiterated a Buy rating for Micron with a $42 price target citing that the growing DRAM industry will persist to allow for decent prices well into 2015. He noted, “Assuming ~50K-to-100K of combined incremental capacity at Samsung’s Line 17 Phase 1, Micron (lnotera/Rexchip), and SK Hynix, we expect industry DRAM wafer output to remain unchanged or decrease slightly in 2015, given tech migrations to 2Xnm and beyond result in 10-15% wafer output loss. We believe Samsung is preparing to add 14nm foundry capacity at S2 and S3 (Line 17 Phase 2) as needed to fulfill customer demand. We expect Micron’s DRAM margins to remain biased upward in 2015.”
Lipacis currently has a 76% success rate recommending stocks and a +14.3% average return per recommendation.
Shah also reiterated a Buy rating on Micron and raised his price target from $40 to $45. He raised his estimates for the overall NAND and DRAM chip markets and for the company’s possible sales. He explained, “We revise up 2015F DRAM market size by +17% Y/Y to $49.6bil (+7.0% Y/Y) and 2015F NAND market size by +8.6% to $31.5bil (+8.2% Y/Y). We expect DRAM supply to remain tight, as bit growth of 25% will likely be in line with end demand. In addition, we are raising our Micron DRAM and NAND estimates on higher bit growth as strong mobile DRAM and server drive 20-25% demand bit growth. We are raising our CY15 DRAM estimate to $13.0bil (+14% Y/Y) from $12.6bil and cons. $12.4bil (+6% Y/Y). Our MU DRAM growth estimate of +14% remains conservative relative to industry +17% Y/Y DRAM revenue growth due to lower bit production.”
Shah currently has a 58% success rate recommending stocks and a +8.0% average return per recommendation.
On average the top analyst consensus for Micron is Strong Buy.