Two Analyst Takes On Micron Analyst Meeting (MU)

We have been watching Micron Technology, Inc. (NYSE: MU) for quite some time.  We even listed it as a "turnaround that hadn’t turned" and we have noted how the company is in a strange position because DRAM is now a commodity that is no different than gold, rice, or sugar.  The difference is that through time the prices of DRAM only seem to fluctuate on whether or not the price falls 1% each quarter or 10% each quarter.  This morning we are showing two takes from analysts that attended Micron’s analyst meeting yesterday.

The first take is from Goldman Sachs, which rates Micron with a Neutral rating.  Goldman noted that while DRAM price have stabilized in recent weeks, they still think considerable oversupply is going to persist.  The firm also noted that Micron is looking for a DRAM partner to expand on its 300mm capacity.  Another issue is weak NAND fundamentals for the foreseeable future with average sale prices to be down 40% to 50% from the last quarter.  While Goldman noted Micron’s de-consolidation of the image sensor operation, an IPO is not expected anytime soon.  Goldman Sachs is maintaining its Neutral rating with 2008 targets at -$1.22 EPS and 2009 targets at -$0.20 EPS.

American Technology Research has a different take.  For starters, it has a Buy rating on Micron with a $10.00 price target.  AmTech noted that Micron is lowering costs as a central component of their strategy. In particular, they project industry leading NAND gross margins in 6-months. Pricing has stabilized over the last several DRAM negotiation periods and seasonal factors have evened out NAND prices despite weak demand. Their capital expenditures are stable and the future expenditures will be related to market data. Additionally, MU is seeing results in their investments in 300mm capacity. MU will also see flat contract prices early this year in the bottoming out DRAM market. 

This tied right into Qimonda article asking if it was a buyout candidate this week.

So far in early trading, Micron shares are down slightly more than 3% at $6.89, and the 52-week trading range is $5.47 to $14.20.

Jon C. Ogg
February 8, 2008