Morgan Stanley Previews Micron's Earnings

Morgan Stanley is out with a research report previewing Micron Technology, Inc. MU as it previews the company's earnings report. It has an Overweight rating and a $13 price target on shares. In a note to clients, Morgan Stanley writes, "We expect in-line to better results versus investors expectations of a miss given better memory pricing data thru May with impact from higher DRAM costs at Inotera (1/3 rd of Micron's DRAM supply) from wafer scrap as a swing factor. However, we believe investors will focus on the pricing outlook for August quarter. Our industry checks suggest DRAM pricing to remain under pressure through July as PC OEMs are reluctant to replenish DRAM inventory, awaiting back to school demand and tablet impact. We believe server DRAM demand (~15% of MU sales) remains stable with relatively high barriers of entry for Tier II DRAM makers on performance requirements. On NAND, data points are more constructive and we expect stable pricing in 3Q as Apple starts to take 20nm output from the NAND makers. Our checks indicate Apple is mostly taking 32nm NAND output so far." Shares of MU lost 3 cents on Friday to close at $7.87, a loss of 0.45%.