Micron's DRAM, which accounts to about 30% of its total revenue, is the world's second largest player in the sector, has been struggling this year due to weak demand and delays in PC shipment, Pacific Crest noted.
Keybanc expects PC DRAM capital expenditures to be down 11% year-over-year in 2016, driven by slightly lower capex at Samsung (SSNLF), Inotera and Hynix.
"We believe the DRAM market has changed. Now with just three players instead of six or seven vendors, the remaining players should produce consistent strong free cash flow," analysts at Keybanc said.
Additionally, analysts at Pacific Crest lowered Micron Technology 2015 earnings to $3.06 per share from $3.19, and 2016 earnings per share to $3.16 from $3.91.
Micron Technology, based in Boise, Idaho, is a semiconductor devices provider that produces dynamic random-access memory, flash memory, and solid-state drives.
Shares of Micron Technology are slightly lower in after-hours trading at $25.11.
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 expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MU's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.54, 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 1.76, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
- 49.11% is the gross profit margin for MICRON TECHNOLOGY INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.41% is above that of the industry average.
- You can view the full analysis from the report here: MU Ratings Report