Sterne Agee CRT: Market Might've Misread Intel Blog Post, Oversold Micron

• Intel Corporation (NASDAQ: INTC) shares are down 8 percent year-to-date, while the shares of Micron Technology, Inc. (NASDAQ: MU) have plunged 54 percent over the same period.
• Sterne Agee CRT’s Douglas Freedman maintained a Buy rating on both Intel and Micron, with price targets of $38 and $20, respectively.
• Intel’s investment announcement has been misread by investors, Freedman believes.

Analyst Douglas Freedman mentioned that the recent pullback in Micron’s shares resulted from markets misinterpreting Intel’s blog about a $5.5 billion investment in non-volatile memory production.

Intel announced that it would invest in its Dalian, China based facility for non-volatile memory capacity. The investment reflects the company’s increased confidence in the technology as a long-term growth factor and will be carried out over several years, Freedman said.

The analyst believes that Intel’s decision to invest in China is not indicative of the company terminating its joint venture with Micron.

“We believe the new investment target has been discussed by both INTC and MU, thus indicating both companies confidence in 3D NAND and Xpoint - a new memory technology developed by the JV,” the Sterne Agee CRT report added.

The supply agreement between the two companies remains unchanged, with Intel supplying Micron with 3D Xpoint and 3NAND bits if the latter’s internal production proves inadequate to meet demand.

Freedman pointed out that there could be a potential disruption to 3D NAND supply chain due to the lag time for conversion to 3D Xpoint.