Micron Technology: Bull Case vs. Bear Case

NEW YORK (TheStreet) -- Bull Case Presented by Morningstar's MORN John Ayling: "NAND-based solid state drives (SSDs) are a growth opportunity for Micron MU. SSDs, which store information in computers, may replace traditional hard drives." Bear Case Presented by Morningstar's John Ayling: "Micron's Lexar subsidiary faces strong buyer power, as it sells its NAND flash products through retail giants such as Wal-Mart WMT)." Auriga USA's Stock Rating: Maintains buy rating, slashes price target to $11 from $13. Auriga greatly reduced its revenue and EPS estimates for Micron on fast-declining DRAM and NAND pricing. "Memory fundamentals have slipped more rapidly than we had anticipated due to weak PC and consumer electronics demand," Auriga analyst Daniel Berenbaum wrote in a recent equity research report. " Still, Berenbaum said his model suggests that even in a weak pricing environment, Micron Technology will continue to produce about $2 billion in free cash flow over the next two years -- even with rising capex requirements. "With the stock trading at tangible book value, we see risk-reward skewed to the upside," Berenbaum said. Modeling in lower DRAM and NAND pricing, Berenbaum lowered his fiscal year 2010 pro-forma EPS estimate to $1.39 from the previously expected $1.42, and kept his revenue estimate at $8.6 billion. Analysts on average were expecting 2010 earnings of $1.92 a share on revenue of $8.7 billion. Berenbaum also lowered his fiscal year 2011 EPS estimate -- to 48 cents a share from the previously expected $1.82 a share, and revenue estimate to $8.9 billion from the previously-expected $10.3 billion. The consensus estimate for 2011 was $1.78 a share on revenue of $11.1 billion. To read the rest, head over to TheStreet.com