For The First Time In Many Quarters, Deutsche Raises Estimates On Micron Technology

Deutsche Bank raised its estimates and price target on its Buy-rated Micron Technology, Inc. (NASDAQ: MU), citing improving market conditions in the DRAM market and company's better execution on its product roadmaps.

The brokerage expects the positive momentum to continue in the fourth quarter and believes the ongoing supply tightness will moderate the seasonal softness for DRAM pricing in the first half of 2017.

"The demand-supply balance for both DRAM and NAND markets have shifted decisively more positive since July. In DRAM, the PC market is recovering at a faster pace than expected (supported by HP's comments), and demand for mobile is robust as Apple build started in July," analyst Sidney Ho wrote in a note.

These factors are driving near term shortages, resulting in price stabilization/increases, and the analyst expects contract prices to further strengthen in the upcoming periods.

"Overall, we raise our EPS estimates for F4Q16 (Aug) from ($0.18) to ($0.13), F1Q17 from ($0.02) to $0.09, CY16 from ($0.32) to ($0.16), and CY17 from $0.80 to $1.00," Ho noted.

Ho also raised the price target by $5 to $20, saying that the valuation should reflect the upturn in the business cycle.

At time of writing, shares of Micron Technology rose 2.85 percent to $16.98.