Micron Gets Crushed, Goldman says Sell - thestockmasters

The Gollum of the Semiconductors, Micron Technology Inc. (NYSE:MU) shares have erased all their gains for 2011.

The stock is down 14% today and trading around $7.25 on very heavy volume.

There are a few analysts who still have hope in the company but the Masters are going to hold out for a new 52-week low before buying.

GOLDMAN SAYS SELL
You can't beat Goldman Sachs (NYSE:GS), and the firm has a Sell rating on Micron (MU) along with a $7 target price. 

(http://www.streetinsider.com) Goldman Sachs estimates for the quarter were 10 percent high in revenue and $0.17 above its adjusted EPS results. As a result of the weak quarter and lower revenue and margins, the firm is cutting its CY11 and CY12 EPS estimates from $0.65 and $0.80 to $0.20 and $0.60. It is also lowering its CY11 revenue and CY12 from $9.42 billion and $10.43 billion to $8.85 billion and $9.8 billion. To go in-line with its new estimates, Goldman is lowering its price target by $0.50 to $7 while maintaining its Sell rating.

The firm forecasts DRAM cash costs at the leading edge are about $0.50/Gb, compared to current spot pricing of about $0.80/Gb and contract pricing of about $1.00/Gb.

An analyst at Goldman Sachs commented, "We expect DRAM prices to come under pressure in Q3 2011, given likely below-seasonal PC demand and relatively high levels of DRAM inventory at customers. Importantly, we think the consensus view that tangible book value should be a floor for the stock is likely to be challenged, given the potential for near-term operating losses, given the weak pricing environment." (source: http://www.streetinsider.com)

MASTERY Bottom line: 

We are thinking about buying on the dip, but not until shares get back to the $6 level.

Let the fire sale and downgrades commence today.  There's plenty of time to build a position in Micron (MU), be patient.

Category: technology