Wall Street Strategies is lowering its price target to $12 from $13.50 on Micron Technology MU following earnings. It still rates shares at Buy.
In a note to clients, Wall Street Strategies writes, "For Micron's October quarter, we are forecasting revenue of $2.11B, representing a sequential decline of about 1.35% mostly as a result of continuing weakness in DRAM revenue slightly offset by improved NAND sales. We believe Micron will be much more willing to sacrifice pricing for higher bit sales than it was in the June quarter. A favorable shift in PC demand may provide a nice upward surprise, but at the moment we are not counting on it. We expect non-GAAP gross margin to increase slightly sequentially to 22.7%, mainly as we expect NAND cost per bit to decline much faster than its ASP. On the bottom line, we estimate earnings per share of $0.05. Given that we continue to expect similar strong earnings growth prospects, we still expect a PE multiple of approximately 15, higher than the industry average of 13; however, as a result of the earnings miss, which provides a lower than expected earnings base, we are reducing our forecasted F2012 EPS.
Consequently, we are reducing our price target to $12.00 and maintaining our BUY rating."
Shares of MU gained 1 cent today to close at $7.48.
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Posted In: Analyst ColorPrice TargetAnalyst RatingsInformation TechnologySemiconductorsWall Street Strategies
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