Micron's Buyback Praised on Wall Street as an `Outlier' to Peers

(Bloomberg) -- Wall Street is commending Micron Technology Inc. after what Nomura called “one of the best analyst meetings we’ve ever attended.” The company’s $10 billion buyback is also a "big vote of confidence" in the strength of the industry and its own business model, MKM Partners said. The shares rose as much as 8 percent as the market opened, adding to Monday’s 3.9 percent gain.

Micron's Buyback Praised on Wall Street as an `Outlier' to Peers

Here’s what analysts are saying:

Rosenblatt, Hans Mosesmann

Micron executed “one of its best investor days we can remember by cementing the case of the structural change in the memory/storage industry with both significant Micron specific operating profit improvements.”

"We are entering into a new era of prolonged memory cycles” with Micron closing the gap with competition and expanding its content in data center, artificial intelligence, industrial, autonomous driving and Internet of Things.

With Micron generating almost $10 billion in free cash flow per year going forward, investors “will start to view the shares in a different light in a sustainable fashion.” And the buyback starting in fiscal 2019 “signals new valuation dynamic.”

Maintains buy and raises price target to Street-high $115 from $100

Stifel, Kevin Cassidy

Investor event “delivered a clear message that Micron’s execution to its strategy and end markets are very healthy.”

"Management addressed investors’ concerns over capacity by explaining" that year-over-year bit capacity increase is limited to 20 percent for DRAM, and 40 percent to 45 percent for NAND Flash despite annual capital expenditure increases.

Reiterates buy and increases price target to $106 from $101

Nomura, Romit Shah

“One of the best analyst meetings we’ve ever attended”

Micron “laid out an interesting story” that combined strong secular growth, solid technology execution and an attractive financial model that will drive shareholder return in both the near and long term.

"New management is executing extremely well on technology inflections,” achieving improved qualification times with each generation.

Maintains buy rating and $100 price target

Cowen, Karl Ackerman

Micron’s commitment to return 50 percent of free cash flow along with buyback program “clearly speak to the company’s confidence that profitability will remain elevated.”

The financial picture continues to impress near term and Micron “is becoming an outlier that is not yet fully appreciated” with its ability to generate more than $8 billion a year in free cash flow.

Reiterates outperform and raises price target to $67 from $65

MKM Partners, Ruben Roy

Buyback is a “big vote of confidence” in the strength of industry fundamentals and Micron’s own business model over the medium term.

Investor day was “upbeat and well-attended,” with management highlighting market trends expected to drive continued demand for increasing memory density growth.

Maintains buy and lifts price target to $72 from $65

Mizuho Securities, Vijay Rakesh

Micron’s free cash flow has “the potential to drive significant deleveraging, buybacks and any aspirational dividends.”

Reiterates buy and $70 price target

KeyBanc, Weston Twigg

Micron “revealed a pathway for several more technology nodes in both DRAM and 3D NAND” in addition to the announcing the launch of its QLC NAND product.

“Micron added to its bullish outlook with a big fiscal third quarter preannouncement, with revenue and EPS guided well above consensus.”

Remains overweight and elevates price target to $80 from $72

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