Micron Technology, Inc. (NASDAQ: MU) has been on a strong run toward the top as of late, and today is no different. This morning, the stock is having an incredible start to the trading session. The reason is simple; investor concerns with regard to price declines have all but been alleviated. Before we get into the story here, we would like to extend a thank you to our partners at Trade Ideas for being the first to alert us to the gains on the stock. At the moment (10:34), MU is trading at $37.07 per share after a gain of $2.89 per share (8.44%) thus far today.
MU Has Had An Incredible Run
Over the past month, Micron Technology has done overwhelmingly well in the market. In fact, over this period of time, the stock has run by around 20% toward the top, breaking through its 52-week high and continuing to find its way upward. While technical indicators show that the stock has reached overbought territory, investors and analysts alike seem to believe that there is more room to run upward.
Recent Concerns Have All But Been Alleviated
Recently, there have been some concerns with regard to pricing in the industry. In particular, investors have been concerned that DRAM and NAND prices would need to fall as the industry cools. Since these are key products for MU, it would prove to be a major concern with regard to the company’s ability to continue driving growth in revenue if prices were to fall. However, as mentioned above, these concerns have largely subsided.
With the idea that prices would likely start to fall relatively soon among these products, investors were pleasantly surprised when they saw the exact opposite. In fact, earlier this month, two major sources of competition for MU (Samsung and SK Hynix) both increased their prices on DRAM products.
On top of this, at the Citi 2017 Global Technology Conference, Ernie Maddock made it clear to investors that prices aren’t likely to fall any time soon. In fact, in his announcement he said that the memory market is on an uptrend that is likely to continue into 2018. As the demand continues to grow, chances are that prices will not fall; in fact, they could rise. If this were the case, Micron Technology would be a key beneficiary to the movement.
Earnings Prove That The Trend Is A Positive One
As if what we’ve seen out of the industry weren’t enough to build excitement surrounding MU, the company released its earnings for the fourth fiscal quarter yesterday. In the report, it was clear that the company is on the right track, with earnings and revenue coming in above expectations and strong guidance to match. Here’s what we saw from the report:
- Earnings Per Share – In terms of earnings per share, MU proved to have an incredibly positive quarter. During the quarter, analysts expected that the company would generate earnings in the amount of $1.84 per share. However, the company actually reported earnings in the amount of $2.02 per share, coming in $0.18 per share ahead of expectations.
- Revenue – Revenue also proved to be an overwhelmingly positive bit of news. During the quarter, analysts expected that Micron Technology would generate revenue in the amount of $5.96 billion. However, the company actually reported revenue in the amount of $6.14 billion.
- Guidance – Finally, MU left no stone unturned with their earnings report, impressing investors yet again with guidance. During the first quarter, the company expects earnings per share to be in the range between $2.09 and $2.23. This is well ahead of analyst expectations of $1.84. Also, It is expected that the company will generate between $6.1 billion and $6.5 billion in revenue. This figure also proved to be ahead of analyst expectations of $6.09 billion.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on MU. In particular, we’ll be following the DRAM and NAND market to see if prices do continue to head upward as demand in these markets continues to climb. We’re also interested in seeing if the company will reach the high bar it has set for itself in the first quarter. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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