Is It Finally Time? Barclays Starts Coverage On Micron And SanDisk

In a new report, Barclays analyst Blayne Curtis discussed two new Barclays initiations in the semiconductor space: Micron Technology and SanDisk Corp. The firm believes that collapsing share prices have created a buying opportunity for traders willing to run the risk of further downside.

Tough Year

So far this year, weak pricing trends have brought an abrupt end to the uptrend in semiconductor stocks. Micron shares are down 56 percent year-to-date (YTD) and SanDisk shares have fallen 46 percent versus only a 5 percent decline by the S&P 500.

According to Curtis, the demand softness is only temporary, but things could still get worse before they get better. “In 2015, we have seen a demand vacuum with both PCs and handsets a hard compare following a strong 2014, but both should be better next year,“ he explained.

Related Link: Micron: A Good Play During Times Of Macro Weakness

Micron

Even at Barclays’ below-consensus earnings estimates, Micron’s stock remains valued at only 7x its 2016 earnings per share (EPS). Over the past two years, the stock has averaged trading at an earnings multiple of around 9x.

Curtis believes that most of the near-term risk has already been priced into Micron’s stock. Barclays initiated Micron at Overweight with a $20 price target on the stock.

SanDisk

When it comes to SanDisk, Barclays isn’t so bullish. Despite a positive long-term bias on the stock, Curtis is waiting on more data on the Enterprise ramp and the decline in removal volumes before making a more definitive call.

Barclays initiated SanDisk at Equal Weight with a $60 target on the stock.

Disclosure: The author holds no position in the stocks mentioned.

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