NEW YORK (TheStreet) -- Shares of memory chip maker Micron Technology (MU) - Get Report, at $14.38, have plummeted 59% for the year to date. The company reports fourth-quarter fiscal 2015 earnings early Thursday. Don't expect great numbers.
Why? Micron still relies heavily on personal computer sales, which are also declining.
But that doesn't mean Micron can't or won't rebound in the future. Besides PCs Micron also gets a sizable portion of its revenue from selling solid-state drives, the type found in popular mobile devices including tablets, smartphones and MP3 players.
Micron stock is what's broken, not the company. Ahead of its earnings, now's a great opportunity to buy.
Micron's DRAM business (for dynamic random-access memory) accounts for roughly 30% of its total revenue. In June, following the company's third-quarter results, Jefferies analyst Sundeep Bajikar said the company is "taking the right supply-side actions" in terms of improving its DRAM position. Bajikar notes price stabilization is possible in the quarter that ends in November. He has a 12-month price target of $36.
Micron's struggles with DRAM supply has compounded the weakness it suffers from its PC business. If the company can reverse is DRAM supply shortfall and improve average selling prices, MU stock becomes too cheap to ignore. It trades at just seven times fiscal 2016 estimates of $2.15; the average stock in the S&P 500 (SPX) index trades at a forward price to earnings ratio of 17.
The 10-point discount in MU shares against the rest of the market would imply Micron is expected to deliver little-to-no growth in the next 12 months. There's is relatively small risk buying MU shares at this level, given Micron's status as the world's second-largest DRAM vendor behind Samsung (SSNLF) .
For the quarter that ended August, the average analyst earnings-per-share estimate is 34 cents a share on revenue of $3.57 billion compared to the year-ago quarter when the company earned 82 cents a share on revenue of $4.23 billion. For the full year, earnings per share is projected to be $2.67, down from $3.23 a year ago, while full-year revenue of $16.17 billion would mark a 1.2% year-over-year decline.
Despite those PC-induced quarterly and full-year projections, things aren't as bad for Micron as they appear. The stock has a consensus buy rating and an average analyst 12-month price target of $26.50, implying more than 70% gains from current levels of around $14.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.