MKM Partners’s Ian Ing, reiterating a Buy rating on shares of Micron Technology (MU), writes that the company’s outlook is increasingly favorable according to both bull and bear, and he’s raising his estimates although some risks remain.

Micron shares are down 81 cents, or 6%, at $12.40.

Ing trimmed his revenue estimate for the fiscal Q3 that ended in May, to $2.959 billion from $2.965 billion. However, he raises his Q4 view o $3.285 billion from $3.17 billion. That brings his full-year estimates to $12.528 billion and 10 cents EPS, up from $12.42 billion and 6 cents a share.

DRAM chip supply-demand ratios are “stabilizing,” he writes:

In DRAM (54% of last quarter sales), competitors Samsung and Hynix have been highly disciplined at lowering DRAM CapEx spending this year, supported by public communications and semi equipment data points. Investors are hoping that initial signs of price stabilization hold, as MU plans to outship CY16 industry bit growth (low 20s). MU’s long-awaited ramp of 20nm output coincides well with seasonal demand in computing (mid-20s % of February quarter DRAM) and mobile (low-20s).

And NAND is looking much stronger in the second half of this year:

We expect NAND market commentary to be the most positive (41% of February quarter sales). In storage, migration to 3D NAND is allowing lower price points and SSD demand elasticity in client and enterprise applications (displacing rotating HDDs). Recall that MU’s 3-D NAND bit crossover is targeted at the end of CY16, and they plan to under-ship bit growth of mid-30s on the later transition.

However, Ing cautions that “both buy-side and sell-side expectations for Micron are increasingly positive,” but that “DRAM stabilization could take longer than expected and MU’s DRAM commentary may be on the cautious side as it is likely seeking renegotiation of the $3.2B Inotera JV buyout.”

By: DocMemory
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