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Micron Technology Inc. (NASDAQ: MU) is set to release its fiscal third-quarter financial results after the markets close on Thursday. Thomson Reuters consensus estimates call for $1.51 in earnings per share (EPS) and $5.41 billion in revenue. In the same period of last year, the company reported a net loss of $0.08 per share and revenue of $2.9 billion.

Ahead of these results, Credit Suisse decided to give its two cents on Micron. While this brokerage firm expects the company to post solid upside to both May’s quarterly results and the outlook for August, the firm sees Micron and memory as one of the more structurally undervalued companies/segments in the semiconductor industry.

In a sense, Credit Suisse released this report to defend Micron after the stock had a single-day drop of about 6% in mid-June.

Credit Suisse reiterated an Outperform rating with a $40 price target, which compares with a $31.54 prior closing price. While memory is still cyclical, the firm is arguing “stronger-for-longer” for three reasons:

• Not enough time has passed for a cycle-ending supply response.
• The cost of capacity is increasing structurally.
• New applications (AI/DL, AD, SSDs) are supporting diversification and a demand-pull not seen since 1994 and 1995.

Credit Suisse’s top-down view is supported by price checks that suggest stability/upside to DRAM through 2017 and more modest than originally expected NAND declines in the second half of 2017. Lastly, idiosyncratic drivers should allow for Micron to narrow the “cost-GAP” with peers and for margin expansion even with modest average selling price declines.

Even if one is unwilling to subscribe to the structurally improving narrative for memory, cyclical analysis and recent supply chain commentary would support a better second half outlook than expected coming into 2017.

As a result, the firm expects the May quarter EPS to be least $1.60, which is 10 cents above the street estimate. Credit Suisse also expects the August quarter EPS to be $1.89, above the consensus of $1.56. The firm is raising its calendar 2017 EPS estimate to $6.28 from $5.13 and its calendar 2018 EPS to $6.85 from $5.25. The consensus EPS estimates are $5.41 and $4.44 for calendar 2017 and 2018, respectively.

Ahead of the earnings report, a few other analysts weighed in on Micron as well:

• Barclays has an Overweight rating with a $40 price target.
• Stifel has a Buy rating with a $47 price target.
• Rosenblatt Securities has a Buy rating.
• Wells Fargo has an Outperform rating with a $40 price target.
• Cowen has an Outperform rating with a $38 price target.
• Robert Baird has an Outperform rating with a $40 price target.
• Mizuho has a Buy rating with a $35 price target.
• Credit Suisse has an Outperform rating with a $40 price target.
• Macquarie has an Outperform rating with a $35 price target.

Excluding Thursday’s move, Micron has outperformed the broad markets, with the stock up 47% year to date. Over the past 52 weeks, the stock is actually up nearly 150%.

Shares of Micron were last seen down 1.1% at $31.86 on Thursday, with a 52-week range of $11.50 to $32.96 and a consensus analyst price target of $39.11.