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Why Is Micron (MU) Stock Gaining Today?

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Shares of Micron (MU - Free Report) gained nearly 5% in early morning trading Monday after the memory-chip maker lifted its earnings and revenue guidance for its fiscal third quarter. The move also came on the back of news that tariffs between the U.S. and China were being put on hold amid optimistic discussions between the two nations.

Micron said it now expects Q3 revenue in the range of $7.70 billion to $7.80 billion, up from its previous guidance of $7.20 billion to $7.60 billion. This new guidance also compares favorably to our consensus estimate of $7.44 billion. Micron’s third quarter ends on May 31.

The trendy memory solutions provider also projected adjusted earnings of $3.12 to $3.16 per share, well above its previously-announced range of $2.76 to $2.90 per share.

“Our third-quarter results are driven by focused execution of our strategy against a backdrop of healthy industry fundamentals,” said CEO Sanjay Mehrotra in a statement.

Heading into the day, analysts had been become more bullish on Micron’s earnings outlook, but estimates remained within the company’s own guidance. The Zacks Consensus Estimate for the company’s Q3 earnings currently stands at $2.86 per share, up two cents from where it was just a month ago. This bullish revision activity has earned the stock a Zacks Rank #2 (Buy).

Micron’s new guidance will likely inspire a fresh batch of positive analyst revisions, so investors should look for changes to the stock’s Zacks Rank soon. MU remains one of Wall Street’s top growth stocks, with current estimates calling for EPS growth of nearly 123% on revenue growth of 44% in the current fiscal year.

Micron is also popular among value investors thanks to its muted valuation metrics. The chip designer is trading at just 4.9x forward 12-month earnings, and its PEG ratio of 0.5 implies that buyers are getting a great price for its growth outlook as well.

The company is hosting an investor day on Monday, which means more positive news could follow shortly.

Meanwhile, stocks were moving higher across the board to start the week after talk over the weekend from U.S. Treasury Secretary Steven Mnuchin implied offsetting tariffs between the U.S. and China were on hold for now.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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