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Bull of the Day: Micron Technology (MU)

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Founded in 1978 and headquartered in Boise, Idaho, Micron Technology (MU - Free Report) is a leading provider of semiconductor memory and storage solutions.

The company manufactures and markets Dynamic Random Access Memory (DRAM), NAND flash memory, CMOS image sensors, other semiconductor components and memory modules used in computing, consumer, networking and mobile products.

Stock Surges on Improved Guidance, Buyback Plan and Intel Partnership

The company held its analyst day on May 21. There was a lot of good news for investors.

They announced $10 billion share repurchase program and plans to return at least 50% of free cash flow to stockholders beginning in fiscal 2019.

The company also announced a deal with Intel to make the next generation of 3D NAND flash memory chips.

They raised their guidance for their fiscal third quarter significantly. Revenue is expected to be in the range of $7.70 billion to $7.80 billion compared to prior guidance of $7.20 billion to $7.60 billion.

Earnings are expected to be in the range of $3.12 to $3.16 per share compared to prior guidance of $2.76 to $2.90 per share.

Key Markets Driving Growth

"The data-driven economy will transform nearly every industry and drive secular growth in demand for memory and storage. Micron is exceptionally well positioned to capitalize on these opportunities and deliver strong business performance and robust free cash flow," said the CEO.

In the analyst day presentation, the management highlighted potential growth opportunities from its key markets--data center, automotive, client compute, mobile and the Internet of Things.

Further, the AI growth story is just getting started. The CEO said recently “we’re barely seeing the tip of the ice berg there.”

Estimates Surging

Analysts have been raising estimates and price targets after the analyst day. Zacks Consensus Estimates for the current and next year have surged to $11.53 per share and $10.75 per share from $10.99 and $9.86 respectively.

Per CNBC, 23 analysts have strong buy or buy ratings on the stock and just four have hold ratings. There are no sell ratings. The average target price is $76.79 currently, which is up ~30% from the current price.

Micron Technology, Inc. Price, Consensus and EPS Surprise

Micron Technology, Inc. Price, Consensus and EPS Surprise | Micron Technology, Inc. Quote

Bottom Line

Micron is still trading at an attractive valuation of 5.2 times forward earnings, even though the stock has surged as its earnings estimates continue to rise.

With its strong portfolio of high performance memory technologies, market leading position and solid focus on profitability, the stock is expected to continue its uptrend in the coming months.

In addition to a Zacks Rank #1 (Strong Buy), the stock has excellent Style Scores—A for Value as well as VGM. Further, Zacks Industry Rank for “Semiconductor Memory” is in the top 1%.

 

Will You Make a Fortune on the Shift to Electric Cars?
 

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>
 

Disclosure: I own shares of Micron in my personal trading portfolio.




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