How The Toshiba-Western Digital Beef Could Be A Boon For Micron Technology

Micron Technology, Inc. MU 4-percent decline Friday morning isn't deterring analysts at Pacific Crest from calling for the stock to double in value moving forward.

Pacific Crest's Weston Twigg commented in a research report after Micron's earnings report that the company has shown it is not only improving its technology but benefiting from strong memory pricing which supports higher margins and earnings per share growth.

Analyst's Take

Micron's stock has already more than doubled since summer of 2016 and it is possible the stock can double in value moving forward, especially if the Toshiba and Western Digital dispute (Toshiba Corp (USA) TOSYY, Western Digital Corp WDC) results in NAND supply constraints, the analyst added.

Should overall demand for Micron's products hold up, the company could generate an EPS of more than $6 next year and a 10x multiple would value the stock north of $60 per share. However, this extreme bull case scenario may not play out as the analyst expects memory pricing to start declining in both DRAM and NAND, which will impact margins.

Nevertheless, a "more realistic" scenario implies upside in Micron's stock to $40 per share with potential upside coming from the Toshiba–Western Digital dispute. Downside to the stock could also happen if Samsung Electronic SSNLF notably increases its DRAM capacity.

As such, the analyst is recommending investors "buy opportunistically in this market environment." The stock is currently rated at Sector Weight, with no assigned price target.

At last check, shares of Micron were down 4.59 percent at $30.02.

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