Micron Technology (MU)
​Upside from NAND will continue to drive margins higher
Micron will report its earnings on March 23, 2017 after market close. Post its recent positive pre-announcement, we believe the overall industry dynamic remains very favorable for both DRAM and NAND and particularly for the latter where supply remains extremely constrained. We think this tight NAND supply is likely to prevail at least through the end of this year compared to our prior view of until 3Q17. Any new NAND greenfield fabs (we have heard Samsung will build a new one in China in addition to its current existing one while Micron is contemplating an additional new fab in Singapore) that are likely to come up is unlikely to make any impact to the supply this year. We therefore see pricing for NAND to remain very strong throughout CY2017. With margins poised to expand for both DRAM and NAND, we expect earnings to climb >$4.00 in aggregate over the next 4 qtrs. Reiterate Buy, Raising PT to $47 (from $45) based on 11x FY18 EPS $4.30.
Summit Insights Group LLC (SIG), founded by Srini Nandury in 2018, is a fundamentals-driven, technology-focused, equity research boutique. SIG analysts cover Semiconductors, Semicap Equipment, Enterprise & Application Software, and IT Hardware & Storage companies. The firm also provides insight into adjacent areas such as Mobile and Internet Technologies.
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