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Technology Stocks : Semi Equipment Analysis
SOXX 291.39+2.8%Nov 26 4:00 PM EST
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From: Clear Eyed1/22/2019 1:44:49 PM
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Maxim Research out this am with a note on Western Digital with bullishness on WDC due to their NAND business.

Note entitled "Concern Regarding Cost Competitiveness Misplaced Per Our Channel Checks - Reiterate Buy Rating"

Summary:

channel checks indicate WDC/Toshiba 96-layer cost downs relative to 64-layer should be on par with other NAND flash players, giving confidence in normalized earnings power estimate of ~$4B ($12.50/share).

WDC’s constrained R&D budget has likely led to a shift to greater spot price exposure, which means WDC’s NAND flash GM goes down faster, but not further than the other players.

FY20 (Jun) shaping up to be a very strong year given pricing bottom for NAND flash in summertime driven by supply cuts kicking in and positive demand seasonality……leading us to keep our (once well-below consensus) estimates largely unchanged.

View current share price as very attractive; reiterate Buy Rating and 12-month price target of $126.

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Point being, if you like WDC for NAND exposure, then doesn't one have to love MU?

While I think MU is the much better long-term play, needs to be appreciated that WDC is now trading at a lower enterprise value than what it paid for SanDisk . . .


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