Micron: Color on QTr- Analysts raising price targets across the board following strong quarter/guidance
- Mizuho Securities raises tgt to $50 from $45. MU reported a solid NovQ and guided its FebQ to $7B/$2.58, up 3% q/q and well above consensus at down 5% q/q. A ~55% GM was 300bps above consensus. DRAM and NAND remain strong, with DRAM Enterprise and Cloud shipments up 50% y/y and SSDs up 50% q/q. With strong fundamentals, continued cost reductions and stable ASP / margins, EPS is now running at an annual rate of ~$10/shr. With GMs at an all-time high at ~56% and a stable 1H18 outlook, firm is reiterating Buy and raising PT to $50. DRAM (~67% of revenue) and NAND (~27% of revenue) outlook was strong with 1x/1y transition and 64L/Gen3 NAND ramp.
- Cowen & Co raise tgt to $53 from $50. Firm and many investors expected a beat and opportunity for a raise, but nobody expected MU to be annualizing $10 EPS off this call. The question is now whether the multiples, which appear unreasonably low (MU ~8x FTM FCF), expand any as improvements in MU's technology roadmaps should drive sustainable cash flows through CY20. The focus remains on DRAM and opportunity for server momentum in C2018 w/ FebQ guidance implying DRAM segment gross margin flat to up from the newly minted 62% for FQ2. These are levels that are over ~2,000bps higher than anything MU has posted in DRAM for 15+ years (see charts). This is great, and Cowen still believes a combination of structural technology limitations and declining demand elasticity should keep DRAM supply very much at bay.
- Stifel Research raises tgt to $75 from $65.
- J.P. Morgan raises tgt to $60 from $55.
- Deutsche Bank raises tgt to $60 from $55.
- Rosenblatt raises tgt to $85 from $75.
- Citigroup raises tgt to $55 from $51.
- WSJ Article on Results