JMP Securities Reiterates On Micron In Face Of Nomura Downgrade

In a report published Wednesday, JMP Securities analyst Alex Gauna maintained a bullish view of Micron Technology, Inc. (NASDAQ: MU) following the company's presentation at the JMP Securities Technology Conference on Tuesday.

The upgrade comes a day after Romit Shah of Nomura downgraded Micron to Neutral from Buy due to market share loses and higher levels of investments in 2016 to boost capacity in DRAM and migrate technology in NAND.

Nevertheless, Gauna stated in his note that shares have underperformed year-to-date due to market concerns around PC channel weakness, losing out on business in the next-generation iPhone and an influx of Samsung memory supply to the market. The analyst added that the company has not refuted these developments, but rather reiterated that PC weakness is not new and was anticipated and also stating that it sees fresh opportunities in the mobile market.

Looking forward, Gauna expects the company to benefit in fiscal 2016 from share gains in combination DRAM/NAND modules for mobile along with the 50 percent to 100 percent increases in mobile DRAM content that are occurring for many key smartphone refreshes. The analyst also added that the company can see eight to 10 points of margin benefit on the 35 percent of supply Micron derives from Inotera under the new terms it recently put in place for 2016.

Bottom line, "we believe that near-term risk factors are now in the stock, that current trading levels of 2x next 12 month EV/Sales represent an attractive entry point at a 50 percent discount to the broader IC industry mean."

Shares remain Outperform rated with a $42 price target.