Micron Technology (MU) Stock Slipping Today on Nomura Downgrade

Micron Technology (MU) stock is falling this morning after the company had its rating cut to 'neutral' from 'buy' at Nomura.

Author:: Kurumi Fukushima
Publish date:: Mar 3, 2015 9:25 AM EST

NEW YORK (TheStreet) -- Shares of Micron Technology (MU) - Get Report are slipping, down 2.53% to $30.45 in pre-market trading Tuesday, after analysts at Nomura downgraded the semiconductor company to "neutral" from "buy" this morning.

Analysts at the firm expect bit growth to surpass the market for the second year in a row, and thinks Micron is under shipping demand in dynamic random-access memory, DRAM.

Nomura added that it believes Micron is behind in technology transitions and is expected to have a big 2016 investment year in order to increase DRAM capacity and shift technology to NAND.

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Analysts at Nomura think the company's May consensus estimates are too high, given continued PC weakness combined with the shift to mobile.

Nomura lowered Micron's May earnings estimate to 73 cents from its previous 80 cents. The firm also lowered its fiscal year 2015 earnings estimate to $3.35 from $3.65, and fiscal year 2016 earnings estimate to $4 from $4.85.

Boise, ID-based Micron Technology is a global manufacturer and marketer of semiconductor devices, principally NAND Flash, DRAM and NOR Flash memory, as well as other memory technologies, packaging solutions and semiconductor systems for use in computing, consumer, networking, automotive, industrial, embedded and mobile products.

Separately, TheStreet Ratings team rates MICRON TECHNOLOGY INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate MICRON TECHNOLOGY INC (MU) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

MU's revenue growth has slightly outpaced the industry average of 10.7%. Since the same quarter one year prior, revenues rose by 13.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, MU has a quick ratio of 1.56, which demonstrates the ability of the company to cover short-term liquidity needs.
The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, MICRON TECHNOLOGY INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
Powered by its strong earnings growth of 180.00% and other important driving factors, this stock has surged by 26.42% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MU should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
You can view the full analysis from the report here: MU Ratings Report