Micron Shares Continue Lower As Analysts Leaning Bearish

Analysts are leaning bearish on Micron Technology, Inc. MU whose shares fell more than 3 percent after the semiconductor company posted mixed second quarter results and outlook fell short of expectations.

Micron posted a net loss of $(0.05) per share, smaller than the Street's estimate of $(0.09) per share. Revenue of $2.934 billion, however, fell short of expectations for $3.221 billion.

For the third quarter, the company sees a non-GAAP loss of $(0.05) to $(0.12) per share and revenue n the range of $2.8 billion to $3.1 billion. Street, on average, expects earnings of 4 cents a share on revenue of $3.20 billion.

The following is the Street's take on the results.

Goldman Sachs – Neutral, PT $10

"We believe the improvement in profitability that some investors have been expecting, driven by the 20nm shrink and the Inotera margin sharing agreement, will take time to occur due to both weak pricing and Micron's inventory build."

Related Link: Why Macquarie Is Downgrading Micron

Barclays – Overweight, PT cut to $14 from $15

"The tough pricing environment was exacerbated by delays in mobile qualification that reduced sales of higher margin mobile products and boosted inventory."

"While the story is again pushed to the right, this was expected and we continue to see an opportunity in 2H16 and beyond as the Inotera deal closes and 20nm DRAM and 3D NAND ramp more meaningfully. That said, we will need to see a return to profitability soon for our thesis around improving industry dynamics to remain intact."

Credit Suisse – Outperform, PT $20

"We expect some investors will be concerned by MU's decisions to hold more inventory and maintain full utilization –we believe both decisions are meant to improve MU's relative cost disadvantage vs. its peers."

"We continue to expect a modest recovery in AugQ/NovQ driven by (1) an improvement in supply/demand dynamics due to seasonality, (2) further 20nm cost reductions in DRAM, (3) benefits from consolidation of Inotera (July) which is still expected to be FCF positive, and (4) some optionality for 3D NAND and XPoint."

"CY16 is turning out to be more challenging than our original assessment owing more to weaker than expected demand than company execution."

Deutsche Bank – Buy, PT $16

"Despite near-term challenges, we are encouraged that MU is on track with the deployment of 20nm DRAM (starting in F3Q16) and 3D NAND (starting in F4Q16)."

"With key catalysts within sight and the stock trading at less than 1x book, we view the risk-reward as attractive."

JPMorgan – Overweight, PT cut to $15 from $22.50

"We still anticipate revenues, margins and earnings to inflect positively in C2H16 and view the May-Q as the bottom. However, we were disappointed in missteps in mobile where the team experienced delays in 20nm LPDDR4 DRAM qualifications."

"Despite underperformance in the past year, we remain OW as we believe memory fundamentals are close to trough levels and we believe financials (especially GMs) should start to meaningfully improve in 2H16 on more balanced supply/demand. We continue to see upside in the stock."

Summit Research – Buy, PT $14

"We think that MU is well placed to start making profits from the Nov. ending Q given current capex cuts at competitors and the impending kick-in of 20nm DRAM and 3D NAND from MU."