Most readers will have seen the earnings and guidance. For those who have not, here is a brief summary: Adjusted earnings per share was $0.82 on revenue of $4.23 billion, and Thomson Reuters was calling for earnings of $0.81 per share on $4.15 billion in revenue. On a sequential basis, revenue rose 6%. Cash flow from operations totaled $5.7 billion for the full year. Micron ended the quarter with cash and short-term investments of $4.53 billion. Micron gave revenue guidance for the coming quarter of $4.45 billion to $4.7 billion, versus the consensus estimate of $4.36 billion.
These are the main analyst calls seen so far, with other analyst calls shown for additional color.
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Bank of America Merrill Lynch talked up Micron’s DRAM price hike and margin upside. The firm has a Buy rating and $43 price target, and it said:
Micron’s overall guidance for DRAM at the fourth quarter results call was bullish. This differs from recently muted sentiment (4Gb spot down 10% QTD, Taiwan PC supply chain weakness, etc). Thus some investors could question the rationale for Micron’s view: our checks with management indicate (1) current contract price is higher than the quarter ago average (spot still high or inflated), (2) Micron’s guidance confirms low single digit hikes in 1Q FY15 ASP (Sep-Nov 2014) vs cost reduction in low single digits — the delta margin upside, and (3) low inventory and tight supply (bit growth guidance for 1Q FY15 only mid to high single digits despite peak season). Management also mentioned some OEM customers want to purchase DRAM at a fixed price (no cuts) for the entirety of 4Q14 due to shortage concerns. Micron’s target bit growth for 2015 is slightly lower than the industry average (DRAM: low to mid 20% range; NAND: high 30% to low 40%).
Wells Fargo maintained its Underperform rating but raised the valuation range to $22 to $28 from $19 to $24 in the call. Its sub-headline was “Still Cautious” and it said:
DRAM contract prices have continued to hold firm in recent months, driving Micron’s reported sales above the high end of Micron’s original guidance range. EPS, even if we back out special gains and charges, was above consensus and our own estimates. Our estimates rise and we are raising our valuation range on Micron given these higher estimates. Nevertheless, we remain concerned that DRAM prices could correct downward at some point in the future, and we remain cautious on Micron’s stock. Our FY2015 EPS estimate increases to $3.08 from a prior $2.40.We are introducing our FY2016 EPS estimate of $2.78.
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Credit Suisse maintained its Outperform rating and $50 price target, while raising 2015 estimates. With the tagline of “Micron is the Next Micron,” it said:
Micron met fiscal fourth quarter revenue and earnings per share but guided first quarter above consensus and significantly better than feared. DRAM average selling price was guided up low single digit quarter over quarter versus down 9% seasonally as supply condition remains tight and commentary around PC DRAM demand (30% of DRAM revenue) was surprisingly upbeat. Despite being up 46% year to date and 353% since the first quarter of 2013 — we continue to argue that Micron still has significant appreciation potential as memory is in the early stages of being recognized more as an enabling technology than a commodity. … We are raising our Fiscal 2015 earnings per share from $3.48 to $3.62 versus street of $3.50, initiating a Fiscal 2016 earnings per share of $4.46 versus street of $4.00 — the stock is currently trading at 8.8 times our 2015 EPS, 7.2 times 2016. Our price target of $50 is based upon a 10 times multiple on what we see as sustainable earnings of $5 and we believe both the multiple and the earnings power are conservative.
Elsewhere, without details from the reports:
- Jefferies reiterated at Buy with a $42 price target.
- Needham & Co. maintained its Buy rating, supposedly raising its price target to $60 from $50.
- Piper Jaffray maintained its Overweight rating and raised its target to $43 from $41.
- Raymond James maintained its Strong Buy rating and raised its price target to $45 from $40.
- RBC Capital Markets maintained its Outperform rating and raised its target to $38 from $37.
- And Roth Capital Partners maintained its Buy rating and raised its price target to $40 from $37.
Micron shares were up just over 6% at $33.67 against a 52-week range of $16.17 to $34.85 as of 11:15 a.m. on Friday. The trading volume had already hit 26 million shares versus an average daily volume of closer to 24 million shares.
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