Raising estimates slightly & raisin

Raising estimates slightly & raising target $18 to $20 on continued strength in commodity pricing; next step for the stock will likely come from better execution, which takes longer. While we have had a persistently bullish outlook on memory since early this year, DRAM and NAND have both been slightly better than we expected qtd, and certainly better than the company's cautious outlook starting the quarter. Having said that, we were pounding the table on the stock at $10, and we aren't now - we think from here, the stock will outperform more gradually as the company shows benefit from DRAM and NAND cost reduction.

Pricing continues to be better, though we'd argue that's increasingly discounted by the stock at these levels. DRAM supply remains tight, and with DRAM spending down sharply we'd expect continued tightness, albeit with a seasonal overlay, through 2017. As we wrote about last week, we have see sharp DRAM migration during 3q from producer's balance sheets to customer's balance sheets - but lean producer balance sheets into 4q should create slower supply growth to mitigate the negative impact of customer prebuying. DRAM supply growth seems likely to be sub 20% next year, which should lead to continued tightness. NAND is also very tight heading into seasonal strength , but with potential step functions in supply as suppliers bring 3D online we'd expect more ups and downs through next year, but still with solid economics.

The key to Micron stock from here will be company-specific execution, where we look for 2 key transitions to gradually improve in costs, realized prices, & EPS. Micron has sharply underperformed peers on profitability the last 18 months, due to extended challenges integrating the manufacturing processes of the combined Elpida and Micron fabs (the 20 nm transition was the first process to roll out to all of the fabs globally), and limited cost benefits in the planar NAND business. While we don't expect Micron to regain the profit levels of Korean peers, we do expect to get closer in the coming quarters.

Execution in DRAM has already started to improve - we expect continued follow through. With 22% sequential bit growth last quarter, and higher bit growth this quarter, we are clearly seeing the inflection from the company's ramp of the 20 nm process. There is so much bit growth that we haven't seen benefits that we had hoped for from mix shift towards mobile, and growing bits by that much does create some strain, but in a fixed cost business reflects substantial cost reduction, and we expect substantial improvement in gross margins over the next couple of quarters. The key will be the fast migration to 18 nm that the company has been talking about, as a more mature integration of Elpida positions them to avoid the 20 nm delays. Fast migration to 18 nm should avoid repeating the relative underperformance that the company suffered in the 20 nm migration. We also note signs of better recent execution, with leadership on the GDDR5x graphics RAM standard and better mobile qualifications.

3D NAND transition moving in the right direction, though the pace of the transition has pressured earnings, and some risk remains. We see Micron moving from worst in class cost structure on planar to a middle of the pack cost structure in 3D, which should be a significant positive over time. But we had underestimated how difficult this transition has been, thus far. Taking planar capacity offline to convert to 3D is painful in a fixed cost business, and we estimate that margins should start to improve sharply in the November quarter. It's still not entirely without risk, as the pace of the 3D ramp is so steep that there could be qualification issues that impact pricing, as we saw when the company brought it's Singapore fab up on NAND a couple of years ago. But the potential delta here is substantial, particularly with a relatively quick and less capital intensive migration from 32 layer to 64 layer coming. One key aspect of this transition is that there is substantial negative impact to the May and August quarters from taking planar capacity offline for conversion to 3D - this is low hanging fruit for improvement once the new capacity comes back.

Details on our estimate changes, and new price target goes from $18 to $20 - Our estimate changes are relatively small; we see EPS above the guided range for the August quarter (management guided to a loss of $0.16 to $0.24, we see a loss of $0.13), and we see November quarter EPS at $0.08 vs. our prior $0.06. We'd emphasize that these are small changes, as we had already budgeted for healthy improvement in pricing and were already at the high end of company guidance for the current quarter. For our price target, we are raising our through-cycle EPS estimate from $1.65 to $1.85, based on continued softer DRAM capex - and we expect to be at this EPS run rate within 12 months. We see "through cycle" earnings at slightly above the midpoint of peak ($3.50

結果 (繁體中文) 1:

稍微提高估計及提高目標 18 美元到 20 美元繼續實力在商品定價;下一步的股票很可能會從更好的執行，需要更長時間。而今年年初以來，我們都有記憶體前景持續看好，DRAM 和 NAND 都略好于我們預期 qt 離散度，和當然要比公司的未來持謹慎態度開始的季度。有的說，我們被擂著桌子上 10 美元，股票和我們不是現在 — — 我們以為從這裡，股票表現將超越更逐漸所示公司效益從 DRAM 和 NAND 降低成本。定價仍然是更好，雖然我們認為這越來越多地打折，折扣率在這些級別股票。DRAM 供應仍然緊張，和 DRAM 開支下降大幅我們預料將會繼續密性，儘管與季節性的覆蓋，到 2017 年之間。如我們寫了關於上個星期，我們看到鋒利的 DRAM 遷移期間從生產者的資產負債表對客戶的資產負債表-3q 但成 4q 精益生產資產負債表應創建供應增長放緩，以減輕客戶 prebuying 的負面影響。DRAM 供應增長似乎可能是子 20%明年，應導致持續性。NAND 快閃記憶體也是很緊的標題為季節性的力量，但在供應的潛在階梯函數為供應商帶來 3D 線上預料將會更加起伏跌宕通過下一年，但仍然以扎實的經濟學。微米股票從這裡的關鍵將特定于公司的執行，我們在哪裡尋找 2 的關鍵性轉變，逐步改善成本，實現了的價格和 EPS。微米大幅業績欠佳對盈利能力的同齡人，過去 18 個月，由於集成組合爾必達和微米晶圓廠 （20 毫微米過渡是第一個進程全球範圍內推出的所有晶圓廠），製造流程的擴展挑戰和有限平面的 nand 快閃記憶體業務成本效益。雖然我們並不指望微米重拾韓國同行的利潤水準，我們期望在未來幾個季度中靠近。在 DRAM 的執行已經開始提高-我們希望繼續的跟進。22%順序位增長最後一個季度，與較高的位增長這一季，我們清楚地看到從公司的坡道拐點的 20 奈米制程。還有這麼多的位增長，我們沒見到效益，我們曾希望從混合轉向移動，越來越碎片太多會創建一些緊張，但在固定的成本業務反映了大幅度地減少成本，和我們期望在未來幾個季度毛利率大幅改善。關鍵將是快速遷移到 18 nm 公司一直在談論，因為一個更成熟的一體化的爾必達的立場，以避免 20 毫微米延誤。快速遷移到 18 nm 應避免重複該公司遭受 20 毫微米遷移中的相對較差。我們也注意到更好地使用 GDDR5x 圖形 RAM 標準和更好地移動資格領導最近執行的跡象。3D NAND 過渡朝著正確的方向，雖然轉型的步伐一直壓收益，和一些風險依然存在。我們看到微米移動從最差的類成本結構上平面到 3D，應該隨著時間的推移顯著正的包成本結構中間。但我們低估了多麼困難這一過渡已，到目前為止。考慮平面能力離線將轉換為 3D 是痛苦的固定的成本的商業，和我們估計獲利率應著手 11 月季度大幅改善。正是仍然不是完全沒有風險，像 3D 坡道的步伐是太陡，可能影響定價的資格問題，正如我們看到當公司帶來了它新加坡晶圓廠對 NAND 一幾年前。但是，潛在的三角洲是巨大的尤其是相對較快和較少資本密集的遷移從 32 層到 64 層來。這種轉變的一個關鍵方面是實質性的負面影響的 5 月和 8 月的季度從以平面能力離線轉換為 3D-這是低掛的果實為改進，一旦新的容量回來。我們估計的變化和新的價格目標的詳細資訊去從 18 美元到 20 美元-我們估計的變化是相對較小;我們看到 EPS 以上指導範圍 8 月季度 (管理引導到損失的 $0.16 至 0.24 美元我們看到損失 0.13 美元)，我們看到 11 月季度 EPS 在與我們事先的 $0.06 0.08 美元。我們將強調一點，這些小的變化，我們已經已經編入預算的健康改善的定價以及已經在公司指導對當前季度高端。我們的目標股價，我們養了我們通過週期 EPS 估計從 1.65 美元到 $1.85，基於繼續柔和的 DRAM capex-和我們預期可在 12 個月內運行率這 EPS。我們看到"通過週期"收益略高於中點的高峰 ($3.50

結果 (繁體中文) 2:

提高估計略與籌資目標$ 18在商品定價的持續走強$ 20; 對於股市下一步將可能來自更好的執行，這需要更長的時間。自今年年初雖然我們已經對內存持續看漲後市，DRAM和NAND均出現了比我們預期QTD比公司的前景持謹慎態度開始季度稍微好一點，當然更好。話雖如此，我們對該股$ 10敲著桌子，我們是不是現在-我們認為從這裡開始，股價將跑贏大市逐漸多的公司表示來自DRAM和NAND的成本降低效益

的定價仍然是更好雖然我們要說的卻是日益受到股市在這些級別的折扣。DRAM供 ​​應仍然緊張，並與DRAM支出大幅下降，我們期望繼續氣密性，儘管有季節性的覆蓋，通過2017年當我們寫了關於上週，我們看到來自生產商的資產負債表3Q客戶的資產負債表中尖銳DRAM遷移-但精益生產的資產負債表到四季度應該創造更慢供應的增長，以減輕客戶prebuying的負面影響。DRAM供 ​​應增長很可能要分20％，明年，這應該引起持續密封性。NAND也很緊張標題進入季節性強，但隨著供應的潛力階躍函數為供應商帶來的3D網游我們預計到明年更加跌宕起伏，但還是憑藉雄厚的經濟性。

從這裡到美光股票的關鍵將是公司特異性的執行，我們找2鍵轉換，逐步成本，實現價格，與EPS提高。美光已大幅盈利表現遜於同業在過去的18個月中，由於延長的挑戰整合合併爾必達和美光晶圓廠（20納米的轉變是推出所有晶圓廠的全球第一道工序）的製造工藝，以及有限的成本在平面NAND商業利益。雖然我們不期望美光奪回韓國同行的利潤水平，我們期望獲得在未來幾個季度接近

執行在DRAM已經開始好轉-我們期待繼續跟進。有22％的環比增長一點上季度和更高的位成長率在本季度，我們清楚地看到，從該公司的20納米制程的斜坡拐點。目前，我們還沒有看到，我們已經從對移動結構的轉變希望，並通過不斷增長的多比特確實創造了一些應變的好處這麼多有點增長，但在一個固定的成本商家反映大幅降低成本，我們預計大幅改善毛利率在未來幾個季度。關鍵是快速遷移至18納米，該公司一直在談論，因為爾必達的一個比較成熟的整合定位他們避免了20納米的延遲。快速遷移至18納米應避免重複，該公司遭受了20納米遷移的相對表現不佳。我們也注意到近期較好執行的跡象，在GDDR5x圖形RAM標準的領導和 ​​更好的移動資格。

3D NAND過渡正確的方向前進，儘管轉型的步伐盈利壓力，以及一些風險依然存在。我們看到，美光在課堂成本結構最糟糕的移動平面上的包裝成本結構在3D，這應該是一個積極的顯著隨著時間的中間。但我們低估了這個過渡有多難了，迄今。以平面容量離線轉換為3D是在一個固定的價格的經營痛苦，我們估計利潤率應該開始於十一月季度大幅提高。它仍然不是完全沒有風險的，因為3D斜坡的步伐是如此陡峭，有可能是資質問題是影響定價，因為我們看到，當公司把它的新加坡幾年前對NAND晶圓廠起來。但這裡的電位差是相當大，特別是與從32層到64層來相對快速且較少的資本密集型的遷移。這種轉變的一個關鍵方面是有採取平面容量離線轉換為3D的五月和八月季度實質性的負面影響-這是需要改進的，一旦新的產能低掛水果回來了。

我們的預測變化的細節，並新的目標價從$ 18個變為$ 20日-我們估計變化相對較小; 我們看到了八月季度的指導範圍EPS以上（管理引導至$ 0.16至$ 0.24的損失，我們看到的$ 0.13損失），而我們看到十一月季度每股收益為0.08 $，而我們之前$ 0.06 我們想強調的是，這些都是小的變化，我們已經預算定價健康的改善和已經在公司指導的高端當前季度。對於我們的目標價，我們是從$ 1.65提高我們通過循環每股收益為$ 1.85的基礎上繼續柔和DRAM資本支出-我們期望能夠在這個EPS 12個月內運行率。我們看到“通過循環”盈利稍微峰值的中點（$ 3.50以上