NEW YORK (TheStreet) -- Micron Technology (MU) stock is rallying 3.45% to $17.40 in pre-market trading Tuesday after analysts at MKM Partners upgraded the company to "buy" from "neutral" with a price target of $23.
"In aggregate, we think the risk-reward has turned positive as we approach 2016 and valuations are attractive," analysts stated.
The stock is currently undervalued, the firm noted.
In addition, Intel (INTC) and Micron Technology recently unveiled the 3D crosspoint technology, a major breakthrough in memory process technology, which analysts believe has not yet been fully appreciated, according to the firm's note.
However, going forward, some risks include the company's decision to in-source memory manufacturing along with the negative cash flow expected to come in fiscal year 2016.
Based in Boise, ID, Micron Technology, together with its subsidiaries, provides semiconductor solutions worldwide.
Separately, TheStreet Ratings team rates MICRON TECHNOLOGY INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICRON TECHNOLOGY INC (MU) a HOLD. The primary factors that have impacted our rating are mixed – some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, MU has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
- MICRON TECHNOLOGY INC's earnings per share declined by 38.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MICRON TECHNOLOGY INC increased its bottom line by earning $2.55 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($2.67 versus $2.55).
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 47.64%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 38.23% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 39.1% when compared to the same quarter one year ago, falling from $806.00 million to $491.00 million.
- You can view the full analysis from the report here: MU Ratings Report