Micron Technology (MU) saw its shares surge to an 18-month high Thursday, a day after the memory chipmaker reported better-than-expected fiscal first-quarter earnings and guided much higher than views for the current quarter.
Micron stock leapt 12.7% to 23.19 on the stock market today, earlier touching 23.49, its highest level since June 2015.
Micron received at least two stock ratings upgrades and four price-target hikes from Wall Street analysts.
In the quarter ended Dec. 1, Micron earned 32 cents a share excluding items, up 10% year over year, on sales of $3.97 billion, up 18.5%. Analysts expected Micron to earn 28 cents a share excluding items on sales of $3.98 billion.
IBD'S TAKE: Micron stock has an IBD Composite Rating of 56, meaning it has outperformed 56% of stocks in key metrics over the past 12 months. For more information on Micron stock, visit the IBD Stock Checkup.
For fiscal Q2, Micron expects to earn 63 cents a share excluding items on sales of $4.53 billion, based on the midpoint of its guidance. Wall Street had been modeling Micron to earn 39 cents a share ex items, swinging from a year-earlier loss of 5 cents a share, on sales of $3.91 billion, up 33%.
Micron's memory chips are used in PCs, smartphones, enterprise storage, data centers, automotive applications and other products.
In an interview with IBD, Micron CEO Mark Durcan credited his company's recent performance to "good internal execution, a good supply-and-demand environment driving benign pricing, and a lot of great, exciting new products coming to market."
Before the Q1 report, Boise, Idaho-based Micron had posted six straight quarters of sales declines on a year-over-year basis and seven consecutive quarters of EPS declines.
Durcan blamed the downturn on the effects of trying to integrate its 2013 acquisition of Elpida Memory and an oversupply of memory chips caused by weaker-than-expected PC demand.
Micron is seeing strong growth now in chips for smartphones and servers as well as new markets like automotive advanced driver assistance systems and graphics and memory for video game systems.
Micron's Guidance Spark Price-Target Hikes
Pacific Crest Securities analyst Weston Twigg called Micron's Q2 guidance "eye-popping," driven by strong memory chip pricing and demand. He rates Micron stock as sector weight with a fair value around 24.
Investment bank Needham upgraded Micron to buy from underperform and set a price target of 33. Summit Redstone Partners upgraded Micron to buy with a price target of 26.
Cowen reiterated its outperform rating on Micron and upped its target to 26 from 23. Mizuho kept its buy rating and raised its PT to 27 from 22. Susquehanna Financial Group reiterated its positive rating on Micron and bumped its price target to 25 from 24.
CFRA Research analyst Angelo Zino maintained his hold rating on Micron, but lifted his price target to 25 from 18.
"We see limited supply growth for DRAM (dynamic random access memory) and Nand (flash memory chips) supporting a more stable pricing landscape," Zino said in a note. "We also think Micron is benefiting from a shift toward higher value products, aiding margins."
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