The shares of flash memory maker for PCs, smartphones and other computing devices, Micron (MU), are falling after the company last night reported roughly in-line results, but provided guidance that came in well below analysts' consensus outlook. However, a number of research firms are defending the stock today.

BACKGROUND: Micron reported a Q3 per share loss of (8c), versus the consensus estimate of a (9c) per share loss. The company's revenue came in at $2.9B, versus the consensus estimate of $2.96B. Micron provided Q4 earnings guidance of a (16c)-(24c) per share loss, compared with the consensus outlook of a 4c per share profit. The flash memory maker said that it continues to face "challenging market conditions." Micron also said it is implementing a number of initiatives to reduce costs, drive greater efficiencies, and increase focus on its strategic priorities. The initiatives, which include a global workforce reduction, are expected to save the company over $300 million in fiscal 2017, the company added.

ANALYSTS' DEFENSE: Micron was hurt by "a weak pricing environment" last quarter, and its guidance reflected the fact that improved supply/demand fundamentals and rising PC memory prices have not yet boosted prices, wrote JPMorgan analyst Harlan Sur.

However, the company is continuing to reduce its costs, and its innovations are enabling its products to store more data, Sur reported. Moreover, Micron and its competitors are staying disciplined when it comes to capital spending, causing the sector's medium term supply/demand outlook to remain favorable, the analyst believes. He expects Micron's financial performance to rebound in fiscal 2017 and he kept a $15 price target and Buy rating on the shares. Also upbeat on Micron was Stifel's Kevin Cassidy. The analyst said he still expects flash memory prices to stabilize in the second half of this year and he believes that Micron is effectively reducing its costs.

Predicting that Micron will eventually become profitable again and noting that flash memory is important for the delivery of "higher performance systems," Cassidy continued to recommend the stock. However, he trimmed his price target on the shares to $15 from $16. Flash memory fundamentals continue to improve, and Micron is reducing its costs, wrote Brean Capital's Mike Burton. The analyst conceded that the company's margins and profitability look poised to rise more slowly than he previously expected. However, he kept a $14 price target and Buy rating on the shares.

PRICE ACTION: In morning trading, Mciron sank 10% to $12.40. Western Digital (WDC), which owns flash memory maker SanDisk, dropped 1.4% to $46.60.