Wells Fargo recommends buying Micron, sees positive long-term trends

Ahead of Micron Technology's fiscal Q4 earnings release on September 20, Wells Fargo analyst Aaron Rakers maintains his below-consensus estimates for the company. While near-term trends in DRAM and NAND have weakened, this "overshadows a positive long-term secular trend," Rakers told investors last night in a pre-earnings research note. The analyst believes the "capex intensity and complexity" associated with next generation memory technology transitions, coupled with expanding end market demand, will ultimately result in a "more rational supply/demand environment." As such, Rakers recommends buying shares of Micron at current levels. He points out the shares trade at a 4.3 times price-to-earnings ratio and 2.5 times enterprise value-to-EBITDA on his 2019 estimates. Further, Micron will likely maintain its $10B share repurchase authorization commencing in the current quarter, Rakers contends. He keeps an Outperform rating on Micron with a $63 price target. The stock in early trading is up 11c to $43.73

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