Wells Fargo Cuts Estimates For Micron Technology, Inc. (NASDAQ:MU) And Chipotle Mexican Grill, Inc. (NYSE:CMG)

 

Micron Technology, Inc. (NASDAQ:MU)’s price correction makes it attractive to buy:

Micron Technology, Inc. (NASDAQ:MU)’s stock price has undergone considerable correction to the point that Wells Fargo now feels the stock is attractive to buy. It seems to Wells Fargo that the bottom in the case of Micron’s price correction is around the corner if it hasn’t already come. Micron’s stock price is down more than 58% YTD to hover in the region of $14.

Wells Fargo has $16-$19 price target range for Micron Technology, Inc. (NASDAQ:MU) and maintains Outperform rating on it.

Because of soft demand for memory and weak pricing environment for Micron’s products, Wells Fargo no longer believe the company will attain its prior earnings targets. As such, the firm has cut its fiscal 2016 and 2017 GAAP estimates for Micron, a move that also comes after the company posted a miss in its F1Q2016 results.

For fiscal 2016, Wells Fargo now expects GAAP EPS of $0.15, down from $0.84. As for fiscal 2017, Micron’s GAAP EPS estimate at Wells Fargo falls to $1.20 from $1.80.

Micron Technology, Inc. (NASDAQ:MU)’s F1Q was characterized by misses as expenses and R&D spending soared without corresponding positive impact on topline and bottom-line numbers. Revenue of $3.35 billion for the quarter was down 7% Q/Q and down 27% Y/Y. It also missed the midpoint of Micron’s internal estimate of revenue in the range of $3.35-$3.60 billion. Diluted GAAP EPS of $0.19 matched Wells Fargo’s estimate but missed the consensus estimate of $0.20.

Not only did Micron Technology, Inc. (NASDAQ:MU) miss F1Q expectations, the company also issued a weak guidance for the current quarter. It is looking for F2Q revenue in the band of $2.9-$3.2 billion, which at the midpoint is below the Street estimate of $3.47 billion and Wells Fargo’s estimate of $3.5 billion.

E.coli Updates Put Chipotle Mexican Grill, Inc. (NYSE:CMG) Under Pressure:

Chipotle Mexican Grill, Inc. (NYSE:CMG)’s recently issued performance guidance for EPS and same-store sales (SSS) may no longer hold, according to Wells Fargo. The firm notes that recent E.coli infection updates by CDC in which the agency said new five infections have been reported in three more states complicates matters for Chipotle’s 4Q guidance.

Chipotle Mexican Grill, Inc. (NYSE:CMG) had guided for 4Q EPS in the range of $2.45-$2.85 and SSS to decline 8-11%. The guidance was issued before CDC announced the spread of E.coli to additional states, which Wells Fargo says expands geographic breadth of Chipotle’s same-store sales pressures and further dents the brand perception. As a result, Wells Fargo has cut its 4Q estimates for Chipotle. For example, the firm now expects SSS in the quarter to decline 14% instead of 11% in the prior guidance.
Wells Fargo also lowered its price target range of Chipotle Mexican Grill, Inc.(NYSE:CMG) to $480-$505 down from $505-$520.

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