We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Micron (MU - Free Report) stock has soared over the last several months and its impressive first quarter fiscal 2021 results on January 7 showcased why the memory chip powerhouse might have more room to run.
Comeback Time
The semiconductor space is historically cyclical, and the memory section of the industry is even more prone to waves and is heavily impacted by pricing. And Micron is one of the largest makers of DRAM and NAND memory chips on the planet. This means that Wall Street often treats the stock more like a commodity than most semiconductor stocks.
It’s worth quickly understanding that DRAM chips are key components within PCs and servers. Meanwhile, NAND flash chips are crucial to smartphones and solid-state hard drives. And MU had been hurt by pricing for over a year.
But the industry has seen its pricing power and demand return, and Micron hit its cyclical bottom in the first quarter of last year. The company returned to growth in the third quarter, with sales up 14% and fourth quarter revenue up 24%. Most recently, the Boise, Idaho-headquartered firm beat our Q1 FY21 estimates on January 7 and provided strong guidance.
Micron’s revenue jumped around 12% to $5.77 billion and its adjusted earnings surged over 60% to $0.78 per share. “We are excited about the strengthening DRAM industry fundamentals,” CEO Sanjay Mehrotra said in prepared remarks.
“For the first time in our history, Micron is simultaneously leading on DRAM and NAND technologies, and we are in an excellent position to benefit from accelerating digital transformation of the global economy fueled by AI, 5G, cloud, and the intelligent edge.”
Analysts rushed to update their EPS estimates after the firm raised its outlook, with MU’s consensus earnings estimate for the current quarter up 78% since then. Longer-term, its FY21 earnings estimate has jumped 44% since its Jan. 7 release, with its fiscal 2022 figure 42% higher.
Memorable Run
Micron shares have climbed 55% in the last three months after it began to break out of a rough stretch in August of 2020. The stock is also up 45% in the past year and 115% in the last two years. This is part of a 670% run during the last five years that’s helped it outpace Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , and other giants. And investors can see that this run includes a rough patch.
MU’s recent run has stretched its valuation to its highest levels in years. Still, given the memory space’s commodity-like standing within chips, it still trades at a big discount to its broader industry at 3.4X forward 12-month sales vs. 5.3X. Micron stock has also dipped recently to rest around 6% off its recent highs at roughly $82 per share.
Peeking ahead, Zacks estimate calls for MU’s full-year fiscal 2021 revenue to jump 16%, with FY22 projected to climb over 25% higher to hit $31.1 billion. These estimates would mark a strong return to growth after two down years and see FY22 top fiscal 2018’s sales total.
At the bottom end of the income statement, MU’s adjusted earnings are projected to surge by 36% this year and 98% in fiscal 2022. And we already discussed Micron’s recently boosted earnings outlook.
Bottom Line
Micron’s improved EPS outlook helps it earn a Zacks Rank #1 (Strong Buy) at the moment. The stock also sports an “A” grade for Momentum in our Style Scores system. On top of all of that, 14 of the 21 brokerage recommendations that Zacks has for MU come in at a “Strong Buy” with three more at a “Buy” and none below a "Hold."
Some might think it’s prudent to wait for a deeper possible pullback before pulling the trigger. But given Micron’s outlook, the stock might be able to continue its run in 2021 and beyond.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.9% per year.
These 7 were selected because of their superior potential for immediate breakout.
Bull of the Day: Micron Technology, Inc. (MU)
Micron (MU - Free Report) stock has soared over the last several months and its impressive first quarter fiscal 2021 results on January 7 showcased why the memory chip powerhouse might have more room to run.
Comeback Time
The semiconductor space is historically cyclical, and the memory section of the industry is even more prone to waves and is heavily impacted by pricing. And Micron is one of the largest makers of DRAM and NAND memory chips on the planet. This means that Wall Street often treats the stock more like a commodity than most semiconductor stocks.
It’s worth quickly understanding that DRAM chips are key components within PCs and servers. Meanwhile, NAND flash chips are crucial to smartphones and solid-state hard drives. And MU had been hurt by pricing for over a year.
But the industry has seen its pricing power and demand return, and Micron hit its cyclical bottom in the first quarter of last year. The company returned to growth in the third quarter, with sales up 14% and fourth quarter revenue up 24%. Most recently, the Boise, Idaho-headquartered firm beat our Q1 FY21 estimates on January 7 and provided strong guidance.
Micron’s revenue jumped around 12% to $5.77 billion and its adjusted earnings surged over 60% to $0.78 per share. “We are excited about the strengthening DRAM industry fundamentals,” CEO Sanjay Mehrotra said in prepared remarks.
“For the first time in our history, Micron is simultaneously leading on DRAM and NAND technologies, and we are in an excellent position to benefit from accelerating digital transformation of the global economy fueled by AI, 5G, cloud, and the intelligent edge.”
Analysts rushed to update their EPS estimates after the firm raised its outlook, with MU’s consensus earnings estimate for the current quarter up 78% since then. Longer-term, its FY21 earnings estimate has jumped 44% since its Jan. 7 release, with its fiscal 2022 figure 42% higher.
Memorable Run
Micron shares have climbed 55% in the last three months after it began to break out of a rough stretch in August of 2020. The stock is also up 45% in the past year and 115% in the last two years. This is part of a 670% run during the last five years that’s helped it outpace Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , and other giants. And investors can see that this run includes a rough patch.
MU’s recent run has stretched its valuation to its highest levels in years. Still, given the memory space’s commodity-like standing within chips, it still trades at a big discount to its broader industry at 3.4X forward 12-month sales vs. 5.3X. Micron stock has also dipped recently to rest around 6% off its recent highs at roughly $82 per share.
Peeking ahead, Zacks estimate calls for MU’s full-year fiscal 2021 revenue to jump 16%, with FY22 projected to climb over 25% higher to hit $31.1 billion. These estimates would mark a strong return to growth after two down years and see FY22 top fiscal 2018’s sales total.
At the bottom end of the income statement, MU’s adjusted earnings are projected to surge by 36% this year and 98% in fiscal 2022. And we already discussed Micron’s recently boosted earnings outlook.
Bottom Line
Micron’s improved EPS outlook helps it earn a Zacks Rank #1 (Strong Buy) at the moment. The stock also sports an “A” grade for Momentum in our Style Scores system. On top of all of that, 14 of the 21 brokerage recommendations that Zacks has for MU come in at a “Strong Buy” with three more at a “Buy” and none below a "Hold."
Some might think it’s prudent to wait for a deeper possible pullback before pulling the trigger. But given Micron’s outlook, the stock might be able to continue its run in 2021 and beyond.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.9% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>