NEW YORK (TheStreet) -- Micron Technology (MU) - Get Report stock is gaining by 1.72% to $10.63 in mid-afternoon trading on Wednesday, as Topeka Capital reiterates a "buy" rating and $16 price target ahead of the chipmaker's 2016 second quarter earnings due out after today's market close.
DRAM pricing has declined more than expected, but the firm's forecast for second quarter gross margin of below 20% will likely be the trough, Topeka Capital wrote in a note, Barron's reports.
End demand for the PC and smartphone market remains steady, which should benefit demand and the pricing environment into mid-2016, the firm noted.
"We believe fundamentals are in the process of bottoming, and can steadily improve for the company reflecting stabilizing demand and improving cost metrics," Topeka Capital added.
For the most recent quarter, analysts are expecting Micron to report a loss of 8 cents per share on revenue of $3.05 billion for the quarter, compared with earnings of 81 cents per share on revenue of $4.17 billion for the year-ago period.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C.
Micron's strengths such as its reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures are countered by weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow.
You can view the full analysis from the report here: MU
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.