Micron Technology Inc.
) reached a new 52-week high of $13.50 on Jun 17, 2013. Micron
shares gained momentum on the approaching Elpida buyout, solid
guidance provided in its second-quarter 2013 results announced on
Mar 21 and an expected improvement in memory pricing environment
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The closing price of the memory-chip maker on Jun 17, 2013 was
$13.24, representing a stellar 1-year return of about 122.9% and
a year-to-date return of about 99.7%. Average volume of shares
traded over the last three months stands at approximately 32.4
Moreover, this Zacks Rank #2 (Buy) company has a market cap of
$13.6 billion and a long-term expected earnings growth rate of
Industry trends indicate improving memory pricing environment.
The price upside is mainly due to restricted supply by two large
memory manufacturers, Micron and Samsung.
Analysts expect supply to remain constrained and hence memory
pricing is likely to trend higher.
Apart from this, the soon-to-be completed Elpida acquisition will
help Micron to gain memory market share, which is mostly
). Micron will also be able to save roughly $400.0 million on the
purchase price, given stronger dollar value against yen.
During the last quarter, Micron reported loss per share of 28
cents, which was better than the year-ago quarter results but
wider than the Zacks Consensus Estimate of 20 cents loss per
share. However, the chip-maker mentioned its optimism for the end
markets such as mobile, server, networking enterprise and
embedded based on strong demand for its memory chips. Micron is
also confident of witnessing supply/demand balance for DRAM and
NAND memory chips in 2013 and 2014. The chipmaker expects
industry-wide DRAM wafer capacity to get reduced, which will
bring down supply, ultimately boosting ASP. For NAND, Micron is
confident about growing demand due to increasing use of solid
state drives in smartphones.
Micron also stated that it is focusing more on the mobile DRAM
space and it has already designed low power DDR2 chips for two of
the top five smartphone makers.
The Zacks Consensus Estimate for 2013 and 2014 rose 2 cents and 5
cents to 39 cents loss per share and 94 cents earnings per share,
respectively, in the past 30 days. Four estimates each were
revised upward in the last 30 days for fiscal 2013 and 2014.
We believe that the improved pricing and growing product demand
will lead to a solid third quarter, results of which scheduled to
release on Jun 19.
Other Stocks to Consider
Other stocks in the technology industry that are currently
performing well and have a solid visibility include
Aspen Tech Inc.
), both with a Zacks Rank #1 (Strong Buy).