Shares of memory maker Micron (MU) - Get Report are slipping after the company last night provided second quarter guidance that came in well below analysts' expectations, but Wall Street analysts are still generally bullish on the stock on the whole.

BACKGROUND: Micron last night reported first quarter earnings per share of 24c, versus the consensus outlook of 23c. However, the company's revenue came in slightly below expectations. Moreover, it predicted that it would report a Q2 loss per share of 5c-12c, versus the consensus outlook for a 22c profit. Micron estimated that it would report Q2 revenue of $2.9B-$3.2B, versus the consensus outlook of $3.46B. The company said that its Q1 results were hurt by weakness in PC DRAM, a form of flash memory for PCs. Overall average selling prices for DRAM dropped 13% last quarter, added Micron.

ANALYST REACTION: Micron's weak guidance was mostly caused by higher DRAM costs, according to Cowen analyst Timothy Arcuri. However, Arcuri expects the company's DRAM costs to decline significantly in its May and August quarters. Meanwhile, PC DRAM prices should rise "at least a little" and another key flash memory supplier, Samsung, is going to sharply reduce its capital expenditures on DRAM this year and may significantly lower its investment in the technology in the future, Arcuri believes. He says that Micron's gross margins have bottomed, and he trimmed his price target on the name to $22 from $24 but kept an Outperform rating on the shares. Micron will have several positive catalysts in 2016, including its acquisition of Inotera, which should boost Micron's EPS and could increase its DRAM margins by 5%-9%, according to Pacific Crest analyst Monika Garg. Also likely to help its DRAM margins are the conversion of more of its DRAM bits to 20 nm, the analyst believes. Additionally, the company's NAND margins should be boosted next year as it sells more of that form of flash memory as TLC and enterprise SSDs, and increases the amount of 3D NAND that it sells, according to the analyst. He cut his price target on the name to $18 from $21 but kept an Overweight rating on the shares. Meanwhile, Raymond James analyst Hans Mosesmann downgraded Micron to Outperform from Strong Buy, stating in a post-earnings research note that conditions now seem more broadly weak in the near-term. For mid- to longer-term investors, however, Micron's structural advantages in 3D NAND and 3D XPoint, efficiencies from a 20nm ramp and the Inotera acquisition, and the "continued fertile M&A environment" are all favorable in supporting the stock, Mosesmann contends. The analyst lowered his price target to $17 from $26.

WHAT'S NOTABLE: Out of 32 analysts that have ratings on Micron, 23 of them, or 72%, have Buy or equivalent ratings, according to Bloomberg data.

PRICE ACTION: In morning trading, Micron fell 3.5% to $14.10.

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