MU

Micron Technology reports earnings December 19

What's Happening

Chip maker Micron Technology ( MU ) has appreciated 87.3% year to date, with the stock riding high in sympathy to bitcoin's strong gains. The company will report fiscal first-quarter numbers after the market close December 19, with the consensus calling for $2.12 per share, up from $0.32 during the same period last year.

Technical Analysis

MU was recently trading at $42.22, down $7.67 from its 12-month high and $22.24 above its 12-month low. Technical indicators for MU are bullish with a possible trend reversal. The stock has recent support above $39.00 and recent resistance below $44.50. Of the 21 analysts who cover the stock, 17 rate it a "strong buy", two rate it a "buy", and two rate it a "hold". MU gets a score of 74 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

Chip makers have been among the top performing stocks in recent years, and MU is no exception. Shares have run into selling pressure over the last month, but the stock remains up 87% on the year, and traders will quickly come back into the stock on the heels of a better than expected quarterly report. MU has an attractive valuation, and after the recent sell off, the stock now trades with a P/E of just 9.6, so investor optimism would return if the company tops estimates as the street expects. The consensus calls for earnings of $2.12 per share, but the street has a whisper number of $2.23, suggesting a nice beat for the quarter. MU currently trades at $42.22, with analysts having an average price target of $51.38 on the stock.

Stock Only Trade

If you're looking to establish a long stock position in MU, consider buying the stock under $42.25. Sell if it falls below $38.00 or take profits if it gets to $48.50.

Bullish Trade

If you want to set up a bullish hedged trade on MU, consider a January 30/35 bull-put credit spread for a 30-cent credit. That's a potential 6.4% return (66.6% annualized*) and the stock would have to fall 16.4% to cause a problem.

Bearish Trade

If you want to take a bearish stance on MU at this time, consider a January 50/55 bear-call credit spread for a 35-cent credit. That's a potential 7.5% return (78.5% annualized*) and the stock would have to rise 19.3% to cause a problem.

Covered Call Trade

If you like the stock, but wish to lower your cost basis on a new position, you may want to consider a January $43.00 covered call. Buy MU shares (typically 100 shares, scale as appropriate), while selling the January $43.00 call for a debit of $39.90 per share. The trade has a target assigned return of 7.7%, and a target annualized return of 82.9% (for comparison purposes only).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Originally published on InvestorsObserver.com


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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