Micron Technology Stock Is a Bargain, Say Analysts -- Barrons.com
DOW JONES & COMPANY, INC. 3:53 PM ET 12/17/2018
Symbol Last Price Change |
| MU | 33.88 | -0.32 (-0.94%) | | QUOTES AS OF 04:00:00 PM ET 12/17/2018 |
Micron Technology (MU) reports its earnings this week, and some analysts are optimistic over the stock's long-term prospects due to its valuation, even as they predict that the company will be downbeat about the outlook.
The chip maker is scheduled to report its fiscal 2019 first-quarter results on Tuesday after the market closes. The Street expects Micron to report earnings of $2.95 per share and revenue of $8 billion for the quarter that ended in November, according to FactSet. The consensus forecasts for the current quarter are for EPS of $2.41 and $7.3 billion in revenue.
Bank of America Merrill Lynch analyst Simon Woo reaffirmed his Buy rating and $55 price target for Micron stock, citing the company's low valuation.
Micron currently trades at just four times Woo's estimate of $8.58 in EPS for 2020. He predicts the company will generate $2.14 in EPS this quarter.
Reductions in average selling prices will cut into earnings in the fiscal second quarter, but Micron will still bring in more revenue and profits than it did during previous upturns for the stock, in fiscal 2014, 2015, and even 2017, he said. "Our Buy rating is based on low multiples, high ROE and share buyback," he wrote, referring to return on equity.
Micron stock was up 0.5% to $34.38 on Monday. The shares have fallen nearly 45% since the summer due to concerns about a potential protracted downturn in the semiconductor industry.
In similar fashion, Macquarie Research analyst Srini Pajjuri reiterated his Outperform rating for Micron stock.
Micron may not earn as much as analysts expect in the fiscal second quarter, he wrote on Thursday, but the stock price already reflects that risk. Priced at four times his forecast for earnings in calendar 2019, the stock is inexpensive, he argued.
He reaffirmed his $60 price target for the stock, predicting that price declines for dynamic random-access memory will moderate starting in the May quarter. DRAM is used in desktop computers and servers.
Micron is the second-largest producer of memory in the world, ranking behind Samsung Electronics. It owns memory- wafer factories in the U.S., Singapore, Japan and Taiwan.
Write to Tae Kim at tae.kim@barrons.com
[I don't know why this guy keeps saying the Micron is the second largest producer of memory in the world. Hynix is second, Micron is third.] |
