Sterne Agee Reports Margins Improving On Micron Technology

According to Sterne Agee, Micron Technology (NASDAQ: MU) reported F2Q11 (Feb) revenues/EPS of $2.25B/$0.07 vs. consensus of $2.07B/$0.4 and its estimates of $2.05B/($0.04).

Sterne Agee reported that proforma earnings ex-stock options were at $0.09. Gross margins at 19.4% were better than our estimate of 17%. “We believe stable DRAM-NAND pricing into C2Q/3Q could drive better margins. Raising our F11E(Aug) from prior $9.06B/$0.41 to $9.36B/$0.58. Maintaining our F12E at $10.25B/$1.08. We believe MU is structurally and financially better positioned than some of its Korean and many of the Taiwanese peers; diversified wafer supply all position well. Reiterating our Buy and $17 PT on MU, as we believe near-term DRAM and NAND price trends will continue to be stable because of a combination of conservative Supply ramps and lesser risk of Tablet overbuilds. MU's NAND revenues up 8% in the weakest point of the year could point to upside to the down 8%q/q consensus for SanDisk (SNDK, $43.46, Buy). Also MU 2H IMFT ramp has an SLC skew. MU exited the quarter with TBV ~$8 per share versus $7.67 in the prior quarter and a strong balance sheet with total cash per share at $2.11. TBV should continue to improve as margins improve.”

Micron Technology closed yesterday at $10.61.