Micron Technology, Inc. Benefits From Industry Consolidation, Analysts Say

Courtesy of Benzinga.

Micron Technology, Inc. (NASDAQ: MU) may be gaining stability from and industry consolidation among computer chip makers, an analyst said Friday.

Micron shares rose sharply after missing fiscal first-quarter Street views but forecasting sales of its dynamic random-access memory chips well above expectations.

“Limited industry supply growth is driving less price volatility,” Deutsche Bank’s Sidney Ho said in a note reiterating a Buy rating and $40 target.

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The company forecast that sales growth for its DRAM chips will increase in the “low single-digits,” well above the decline of 5 percent to 10 percent many analysts expected.

Profit margins for the segment ticked up slightly and Ho sees room for further widening.

“Bears have consistently worried about falling DRAM prices,” Jefferies’ Sundeep Bajikar said in a note. But Bajikar sees a “permanent change” in the industry stemming from consolidation as well as slowing technological progress.

Pacific Crest’s Monika Garg cautioned, however, that that margins for the segment “could be at risk” with prospects for expanded manufacturing capacity at competitors Samsung and Hynix.

Garg reiterated a Sector Perform rating and noted that capital spending budgets among Micron’s competitors are double the size seen in a 2012 trough.

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