Wall Street Analysts Remain Bullish On Micron

Micron Technology, Inc. MU, despite a top and bottom line Q2 earnings beat, couldn't live up to lofy earnings expectations, and the stock is trading down by more than 7 percent Friday.

Here’s a rundown of what a handful of Wall Street analysts have to say about Micron’s stock following its latest report.

Voices From The Street

Morgan Stanley analyst Joseph Moore said guidance was in-line with expectations, and the quarter marked the first time in several quarters Micron hasn’t meaningfully increased its EPS targets. “The business continues to operate at new record levels, with DRAM prices well above our expectations reflecting likely some mix shift to cloud and graphics/crypto, offset by NAND prices a little bit weaker,” Moore wrote.

Morningstar's Brian Colello said investors should wait a little longer before buying Micron on the dip. “We reiterate our view that the potential for oversupply remains real and the current imbalance is unlikely to last far beyond the end of fiscal 2018,” Colello wrote.

Firing On All Cylinders

Stifel analyst Kevin Cassidy said there seems to be no end in sight for DRAM memory demand. “In our view, both DRAM and NAND Flash have clearly moved out of the commodity category and are proving to be essential components to system level performance,” Cassidy wrote.

KeyBanc analyst Weston Twigg said Micron’s 1x DRAM node and its 64-layer 3D NAND node are both transitioning well. “While there will likely be memory price declines for NAND through the C2Q-C3Q and potential DRAM price declines in late 2018/ early 2019 as Samsung ramps capacity, we expect overall demand to remain very strong as the cloud build-out continues, supporting our bullish outlook,” Twigg wrote.

Bank of America analyst Simon Woo said Micron is still firing on all cylinders, reporting record-high free cash flow and responsible capital expenditures. “We believe [the] high margin profile will be more notable through FY18, then a soft landing in FY19-20,” Woo wrote.

Ratings And Targets

Despite the sell-off, most analysts remain bullish on Micron stock, but some are more bullish than others:

• Morgan Stanley has an Overweight rating and $65 target.
• Stifel has a Buy rating and $95 target.
• KeyBanc has an Overweight rating and $72 target.
• Bank of America has a Buy rating and $85 target.
• Morningstar has an Overvalued rating and $34 fair value estimate.

At time of publication, the stock was trading down 7.8 percent at $54.30.

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