Micron (NASDAQ:MU) Shouldn't Have to Burn Cash This Cycle

Auriga has a somewhat positive view on Micron (NASDAQ:MU), which they feel won't have to burn through cash in this cycle and may generate $2 billion in free cash.

Auriga said, "We maintain our rating and price target on Micron following a quarter with - as always - a fair number of moving parts but few big picture surprises. MU's NAND expansion trajectory implies that, unfortunately, the trough earnings quarters will also be the peak capex quarters, but on a running basis our model still suggests that MU will not burn cash this cycle - in fact, we still see $2bln+ free cash generation over the next two years. As we previewed, consensus estimates need to come down, but we still see a trough quarter around breakeven, and cuts to consensus should clear the decks and provide a positive catalyst. With the stock trading at book value, risk/reward remains skewed to the upside.

"Our FY11 revenue/GAAP EPS goes to $8.4bln/$0.30 from $8.3bln/$0.28 (consensus $9.3bln/$1.00); FY12 goes to $8.0bln/$0.81 from $7.9bln/$0.84 (consensus $10.1bln/$1.21)."

Auriga maintains a "Buy" rating on Micron Technology, which is trading at $8.01, down $0.27, or 3.26 percent, at 11:46 AM EST. Auriga has a price target on them of $11.