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Technology Stocks : Semi Equipment Analysis
SOXX 312.76+1.1%Dec 8 4:00 PM EST
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From: Sam11/27/2019 3:31:01 PM
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S&P turns positive on Micron's credit outlook, providing potential for upgrade to investment grade status
By Tomi Kilgore
Published: Dec 21, 2018 3:21 p.m. ET

S&P Global Ratings turned positive on the outlook for Micron Technology Inc.'s credit rating on Friday, which suggests a potential upgrade from the current "junk" rating of BB+ to investment-grade status. The credit rating agency said the revision of the outlook from stable is based on the memory chip maker's "substantial operating improvement and debt reduction" that has prepared the company to weather yet another memory industry downturn that is underway. "The positive outlook reflects our expectation that Micron will maintain cost competitiveness and good execution on subsequent process node transitions and a sizable liquidity position, despite material reduction on [capital expenditures] to respond to tough memory market conditions," S&P said in a research note. S&P said it could upgraded the rating to investment grade if Micron can maintain earnings before interest, taxes, depreciation and amortization (EBITDA) margins of at least 50%, total liquidity of at least 30% of sales and a net cash position over the coming year. Fellow credit rating agency Moody's Investors Service had upgraded Micron's credit to an investment grade rating of Baa3 on Oct. 9, citing significant deleveraging and the achievement of a cash balance in excess of reported debt. Micron's stock was down 2.3% in afternoon trade. It has shed 31.7% over the past three months, while the PHLX Semiconductor Index SOX, +0.66% has lost 20% and the S&P 500 SPX, +0.42% has declined 17.2%.

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