| 2018-05-16 10:19:23|
MU, AAPL 10:19 05/16 05/16/18
Before the Move: Watch Micron ahead of analyst day
RBC Capital analyst Amit Daryanani started coverage of Micron (MU) with an Outperform rating this morning, saying the company is offering exposure to DRAM and NAND memory markets at an attractive valuation. The company's analyst day meeting is scheduled for May 21, with Mizuho analyst Vijay Rakesh seeing it as a potential catalyst for the shares as it may reinforce a positive second half of 2018 outlook. ATTRACTIVE VALUATION: RBC Capital's Daryanani initiated coverage of Micron with an Outperform rating and a price target of $80 this morning , as he believes it offers a "unique way" for investors to gain exposure to DRAM and NAND markets at what he views as an "attractive valuation." While the down-price cycle in memory may not be over, the analyst contended that it is more "muted" than estimated and Micron is positioned to generate positive earnings per share and free cash flow in the current environment. Daryanani also pointed out he is positive on Micron's position in the long-term given the more diversified DRAM user base market with much more emphasis on mobile, reduced competition, and the potential for capital allocation steps to be taken. ANALYST DAY COULD BE CATALYST: In a research note of his own, Mizuho's Rakesh said he believes Micron's analyst day could be a catalyst for shares as it may reinforce a positive second half of 2018 outlook with Apple's (AAPL) iPhone/holiday build season and as NAND/DRAM pricing remain stable exiting the June quarter. Rakesh noted that he believes the focus will be on 2019 capex, thoughts on deleveraging/buybacks/dividends, the outlook for NAND and DRAM supply, demand and inventory in the second half of the year, and the ramp of new DRAM and NAND processes. The analyst reiterated a Buy rating and a $70 price target on the shares. Earlier this week, Evercore ISI analyst C.J. Muse told investors in a research note of his own that he expects Micron's analyst day on May 21 to be heavily focused on the CEO and CFO's plans for the ongoing transformation of the company. "Today's Micron is not the Micron of old, and neither is the memory industry," Muse said, adding that he expects management to highlight how memory is no longer just a commodity but a critical component in today's third wave of computing. Muse added that the company's improved financial position puts capital returns on the table and Micron could theoretically buy back as much as half of its stock over the next 3-4 years. "Since the market clearly will not allow this to happen, look for shares to continue to move higher," he contended. Muse reiterated an Outperform rating and $80 price target on Micron shares. "Before the Move" is The Fly's recurring series of exclusive stories that identify potentially market moving events, along with analyst predictions, ahead of the news.
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