Stifel's 5 Takeaways From Micron's Analyst Day

Micron Technology, Inc. MU hosted its annual analyst and investor day Tuesday and delivered a "clear message," according to Stifel.

The Analyst

Stifel's Kevin Cassidy maintains a Buy rating on Micron's stock with a price target lifted from $101 to $106.

The Thesis

Micron's presentation made it clear that the company's strategy and end markets remain "very healthy," Cassidy said in a note. Here are the analyst's five key takeaways from the event:

Micron CEO Sanjay Mehrota said industry demand for memory and storage will grow "substantially" through 2021. Data center demand for memory and storage should grow from $29 billion to $62 billion; mobile demand is expected to grow from $45 billion to $54 billion; automotive from $2.5 billion to $5.9 billion; and Internet of Things from $9 billion to $16 billion, he said.
The capital expenditure growth needed to generate 20-percent industry bit growth for DRAM will be nearly $20 billion in 2018, up from over $15 billion in 2017, according to Micron. The higher capital costs are likely to create an environment of stable DRAM supply in 2018 and beyond, the company said.
Micron will launch 3D XPoint products in late 2019, which could be 10 times denser than DRAM, with 1,000 times the endurance of NAND and 1,000 times the speed of NAND, the company said. Stifel's Cassidy said he's "somewhat skeptical" of the market's adoption of the product.
Micron Chief Business Officer Sumit Sadana said the company is now shipping the industry's first QLC SSD, which can reduce total cost of ownership by a factor of seven.
Micron's board approved a $10-billion share buyback authorization that will start in fiscal 2019. The company said the decision to buy back its stock was based on investor feedback and an opportunity to take advantage of the stock's low valuation.