Zacks Investment Research upgraded
) to a Zacks Rank #1 (Strong Buy) on Sep 3, post its impressive
third-quarter results and the Elpida acquisition.
Why the Upgrade?
Micron swung to profit in the third quarter after reporting
losses for seven consecutive quarters primarily aided by
favorable memory market conditions that led to higher shipments
and an improved average selling price (ASP).
Micron reported revenues of $2.32 billion, up 6.7% year over
year and 11.5% sequentially. Moreover, the company's earnings of
4 cents per share beat the Zacks Consensus Estimate of 3 cents
and improved considerably from the year-ago quarter's loss per
share of 32 cents. Additionally, margins expanded due to higher
sales and lower-than-expected costs.
Moreover, the growth in mobile, server, networking enterprise
and embedded markets bode well for its memory chips. Micron is
also optimistic about supply/demand balance for DRAM (Dynamic
Random Access Memory) and NAND memory chips in 2013 and 2014.
The chip maker expects industry-wide DRAM wafer capacity to
fall, which will bring down the supply, ultimately boosting ASP.
Micron is confident of the growing demand for NAND due to
increasing use of solid state drives in smartphones.
Apart from these factors, the Elpida acquisition is a big
positive for Micron. Also, the fact that Elpida has won a major
DRAM supplying contract from
) will give Micron another reason to cheer. With the acquisition,
Micron's wafer manufacturing capacity will increase nearly
With the acquisition, the number of leading DRAM chip
manufacturers will drop to three, namely, Samsung (the market
leader), Micron and Hynix Semiconductor. Previously, Hynix was
ahead of Elpida while Micron had the lowest market share of the
Other Stocks to Consider
Besides Micron, other stocks with favorable Zacks Ranks are
Recovery Associates Inc.
), both of which carry a Zacks Rank #1 (Strong Buy).
APPLE INC (AAPL): Free Stock Analysis Report
MICRON TECH (MU): Free Stock Analysis Report
PORTFOLIO RCVRY (PRAA): Free Stock Analysis
SANDISK CORP (SNDK): Free Stock Analysis
To read this article on Zacks.com click here.