Bank of America doubles Micron PT to $40

Posted: June 11, 2014 by mattmargolis24 in Uncategorized
Tags: , ,

Bank of America decided to change it’s tune and join the bullish analyst party on shares of Micron. Less than 3 months ago Bank of America did not believe that EPS could go much north of $2 per share.

“Our Underperform rating (vs. a Buy until 21 Nov 2013) is based on a massive stock rally exceeding our up-cycle fair value (as of 19 Dec), a bigger threat from competitors’ (Hynix’s new fab plan, etc.) and weaker-than-expected chip prices (led by NAND). We also worry about the greater downside to DRAM spot and execution risk for new tech deployment (2xnm inferior to Korean peers). We disagree with the bullish consensus, as EPS growth is unlikely to be strong once it hits $2.

Bank of America has officially lifted it’s “underperform” rating and $19.10 target and replaced it with a buy rating and a $40 target.

“We upgrade our rating on Micron from Underperform to Buy with a new PO of $40.0 (FY15E implied P/E 14x, PBR 3.1x). The stock has already moved up strongly (up 33% YTD) but we think further upside will occur,In our view, key catalysts are solid chip pricing environment (tight supply) and cost competitiveness.

“Our EPS revisions for FY15-16E are c.50% on average at higher/lower ASP/cost. We also expect dividend payment from FY15-end. Lower cyclical risk and higher shareholder return lead to bigger EVA (WACC down vs ROE up); clearly a different cycle.”

Shares of Micron are trading at over $30, which is the highest levels seen in over 10 years.

Disclosure: I am long shares of Micron and maintain a $61 price target that was issued in April.

For in-depth coverage on my top picks check out my PTT Research Forensics Newsletter and be the first to know my next move!

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Comments
  1. Mike says:

    Thanks for the article Matt.

    I got in MU at the end of March for 23$ based on your analyst and breakdown of what the future might hold for them…I had prepared myself for what might be a roller coster of a ride in the near future, but in the end memory is global and not going away anytime soon.

    I personally wanted to say thank you for all your hard work and in depth research (along with GTAT)

    Hope all is going well for you over in PTT land. 🙂

    Be well,

    Mike

    Like

  2. Mike says:

    I believe in you 100% Matt.

    Maybe by the end of 2015 i’ll trim off some profits and join “the club” for life.

    As of now, i took a calculated risk and swung for the fences with GTAT.

    Hey, you only live once…right? 🙂

    Be well,

    Mike

    Like

  3. Dlandis says:

    I entered Micron at 6.31 and buying ever since. Not cyclical this time so the future is different.

    Like

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