David Faber (Anchor) 00:00.430
joining us now is mehdi hassani he's senior equity research analyst at suspa anna has a positive rating on the stock just increases price target to three forty five you know i guess a quarter like this mehdi a lot of positive things to say anything in there that's concerning or
David Faber (Anchor) 00:17.590
is it all just good across the board
Mehdi Hosseini (Senior Equity Research Analyst) 00:20.590
i think the eight forty EPS guide for february quarter is something that makes you wonder how good is he going to get from here if you look at the history of memory over the past three decades everything every time margins go above sixty percent it has no room but to go down i
Mehdi Hosseini (Senior Equity Research Analyst) 00:38.750
do believe that we are in a very different supply and demand environment i do believe that there are a number of value add higher margin products that are helping micron to sustain margins and EPS but it is the street that has to gain if you look at the valuation it is only
Mehdi Hosseini (Senior Equity Research Analyst) 00:56.790
trading around the low teen historical average of twelve times forward looking multiple so the the the three forty price target that we put out and all of my peers are increasing price target if it still doesn't account for sustainability of a margin at EPS and if sanjay and the
Mehdi Hosseini (Senior Equity Research Analyst) 01:15.310
team and micron are able to do that sustain the margins and EPS there is a lot more headroom here and the stock could go towards four or five hundred right
David Faber (Anchor) 01:24.270
all right i get it in other words deserving of a higher multiple if in fact they can prove they can sustain those margins so when do we make that judgment or when will we all as you just indicated as well say no you know what once again you know these when you call for a
David Faber (Anchor) 01:37.750
supercycle it actually ends up being near the top
Mehdi Hosseini (Senior Equity Research Analyst) 01:41.700
well it is i don't think anyone has a crystal ball it is going to come down every quarter every earnings season sanjay has to deliver i don't think sanjay and the team could actually help us with a longer term longer term margin power primarily due to the fact that he's in the
Mehdi Hosseini (Senior Equity Research Analyst) 01:57.620
midst of a negotiation with his CSP customers he's negotiating with nvidia AMD and other asic customers and he's just going to come down to micron giving enough margin to be able to add capacity micron is going to be capacity limited and the and and and if sanjay is able to
Mehdi Hosseini (Senior Equity Research Analyst) 02:19.390
maintain margins what i mean capacity will be the key catalyst unfortunately i'm not sure if you could model that or history doesn't really help us here and it's just going to come down to more like a hand to hand combat and earning every earnings earning report at the time