Shares of Micron Technology (MU) are in focus after a Nomura analyst kept a $100 target on the stock following “positive” meetings with management. Nomura’s confidence is of particular note as it comes in sharp contrast to the opinion of UBS, which started coverage of the stock with a Sell rating yesterday. POSITIVE MANAGEMENT MEETINGS: After spending two days meeting investors with Micron’s new chief financial officer David Zinsner and head of investor relations Shanye Hudson, Nomura Instinet analyst Romit Shah maintained a Buy rating on the shares with a $100 price target. In a research note on Friday, Shah says he left the meetings with “several positive takeaways.” The analyst does not anticipate a “massive step-up” in capital expenditures next fiscal year. Further, management did not seem concerned that NAND selling price declines in the February period would persist and they dispelled concerns about mergers and acquisitions, Shah said. He adds that Micron continues to expect dynamic random-access memory suppliers to be rational about capacity expansion in an effort to sustain high margins and cash flow. UBS SAYS SELL: On Thursday, UBS analyst Timothy Arcuri started coverage on the U.S. Semiconductors and Semi Equipment sector, expressing the view that consolidation and a slowdown in Moore’s Law should actually lead to pricing power and inflationary effects that are still in the early innings. However, the analyst told investors he also believes semis are still cyclical and sees some signs of caution moving into later 2018 and 2019 as inventory is likely to start growing faster than revenue and year over year compares start to become unfavorable. For memory, Arcuri is cautious on the cycle near-term, but expects structurally higher profitability levels to ultimately drive a re-rating of the memory and SPE complex. The analyst started coverage of Micron with a Sell rating and a $35 price target, citing cyclical memory concerns and his expectation for “big estimate cuts.” In his analysis, Arcuri argued that artificial intelligence is a huge driver for semis, but in the near-term, memory has driven about two-thirds of the revenue growth across the space and “pricing is about to roll over, potentially worse than 2015/2016.” PRICE ACTION: Micron rose about 0.7%, or 32c, to $50.16 in morning trading.
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