This is a blurb about MU, but there are a couple of comments pertinent to WDC. I'll give the guy credit, raising the PT for Micron to $100 is a ballsy move.
Can't provide a link since I received this in my eTrade account. Bolding is mine.
DJ Tech Trader Daily: Micron Surges 5% as Instinet Hikes Target to $100: Cusp of Another Breakout -- Barron's Blog
Mar 12, 2018 09:45:00 (ET)By Tiernan Ray
Shares of DRAM and NAND memory chip maker Micron Technology ( MU) are up $2.94, or over 5%, at $57.53, after Instinet's Romit Shah this morning reiterated a Buy rating on the stock, and raised his price target to $100 from $55, writing that "after consolidating over the last 3-4 months," the stock is "in the early stages of another major breakout."
Shah raises his earnings estimate for Micron for the fiscal year ending in August of 2019 to $12.22 from $11.78, way above the average estimate on Wall Street of $8.92.
He offers several good things coming for the company: "We see DRAM pricing resuming an upward trend in Q2, a first-time dividend and share buyback announcement in May, continued margin expansion in NAND and increased M&A discussion as important catalysts."
But his main argument behind his price target increase is valuation:
We simply assume that MU trades back to a 3-year average multiple relative to the S&P 500 (-42% vs. -67% currently), semiconductor sector (-34% vs. -60% currently) and several comps including Applied Materials (-27% vs. -54% currently), Lam Research (-23% vs. -56% currently) and Samsung (+10% vs. -11% currently). On a blended basis, the target multiple is 10x, versus 6x currently. This implies a target of $89 on consensus FY19 EPS of $8.90 and a target of $122 on our FY19E EPS of $12.22. We have weighted these two outcomes to derive a $100 target.
Peers of Micron are trading mixed today. Lam Research ( LRCX), the maker of equipment to make those chips, is down 81 cents, at $224.14, while Western Digital (WDC), a competitor in NAND flash, is up 77 cents, or 0.7%, at $100.32.
More at Barron's Tech Trader Daily blog, barrons.com (END) Dow Jones Newswires
March 12, 2018 09:45 ET (13:45 GMT)
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