Kevin Cassidy, Analyst with Stifel, Nicolaus & Co., says he is positive on Micron Technology (MU) because the company is benefiting from consolidation in the DRAM market.
“We think that DRAM supply and demand will remain in balance for the next few years, and we think gross margins continue to expand,” Cassidy says.
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Cassidy says Micron’s gross margins are currently in the 34% range, and he thinks margins can expand to the 40% range. He said that improvement would add a lot of leverage to Micron’s earning power.
“And right now, Micron is only trading around eight times our forward earnings,” Cassidy says. “So we see that as an example as a GARP-y company, growth at a reasonable price.”
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