Shares of Micron Technology Inc. (MU - Analyst Report) hit a new 52-week high of $34.50 on Jun 1, eventually closing at $33.98. The closing share price represents an extraordinary one-year return of 137.46% and a year-to-date return of 56.88%.
On an average, this Zacks Rank #2 (Buy) stock’s earnings have outperformed the Zacks Consensus Estimate by 30.25% over the last four quarters, making investors bullish on the stock. Moreover, the company has a long-term earnings growth expectation of 13.36%.
The underlying driver is, of course, the favorable outlook for the memory market and the company’s strong third-quarter results. Micron’s third-quarter results were aided by improving pricing environment for PC DRAM products, positive market conditions as well as an encouraging operating performance. Better-than-expected demand for desktop refreshes and notebooks also helped PC DRAM performance.
Micron also remains positive about its product launches and growing demand for its products, particularly SSD products. The company is also optimistic about supply/demand scenario for DRAM and NAND memory chips in 2014, which is expected to support prices.
According to management, demand for DRAM and NAND is expected to increase in low to mid 20% and low 40% range, respectively, in 2015, which is a positive, in our view.
Moreover, Micron’s innovations in memory technologies, spanning DRAM, NAND and NOR Flash memory remain the growth catalysts, going forward. These are being widely used in the latest mobile computing devices as well as in consumer, networking and embedded products.
While it may not be easy for Micron to take share from SanDisk Corp. (SNDK - Analyst Report) — a key NAND player —, support from Apple (AAPL - Analyst Report) and Intel Corp. (INTC - Analyst Report), its prime NAND customers, could ultimately turn the situation in Micron’s favor.