Micron Technology: MU Stock May Head to $40

micron stockMicron Technology Points to Impressive Growth

Micron Technology, Inc. (NASDAQ:MU) is surging on the chart after posting another strong quarter and offering up great guidance.

Back in September, Micron Technology, Inc. was vaulting higher on speculation the company could be rippled for a massive takeover worth over $20.0 billion. Since then, the rumors for MU stock have dissipated to the delight of investors, as the stock reached an 18-month high of $23.49 on Thursday, valuing MU stock at $25.0 billion.

The maker of memory technologies such as “DRAM,” “NAND,” and “NOR Flash” has been under some pressure due to pricing softness, but clearly Micron Technology, Inc. is faring much better than many expected. The company’s chips are found in a broad range of applications including computers, mobile, storage, networking and automotive.

Fundamentally, Micron Technology, Inc. has delivered with five straight quarters of EPS beats.

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In the fiscal Q1, the company provided a blow-out quarter after posting an adjusted $0.32 per diluted share on year-over-year sales growth of 18% to $3.97 billion.

The Bull Case for MU Stock

But what really impressed market watchers was the superlative guidance offered for the fiscal Q2. Micron Technology, Inc. predicted it would earn a staggering $0.63 per adjusted share, easily above the consensus $0.39 per diluted share. The sales side was equally impressive at $4.53 billion versus the consensus of $3.91 billion.

To say Wall Street was a bit pleased would be an understatement. Sell side analysts rewarded MU stock with five EPS upgrades for FY17 (ending in September) over the past seven days and 17 EPS upgrades over the past 30 days. Shares of Micron Technology, Inc. also attracted 12 EPS upgrades for FY18 (Source: Micron Technology, Inc. (MU), Yahoo! Finance, last accessed December 22, 2016.)

Given the rising sales and earnings trend, there is currently an absence of takeover speculation, as Micron Technology, Inc. appears to be on the right path.

Now a takeover could still emerge but it would likely represent a smaller bid premium this when MU stock was a trading down at $19.00.

The breakout at the chart resistance at around $18.00 to $20.00 followed a Golden Cross sets up MU stock for a potential move towards the $30 level, last encountered in July 2015.

mu

Chart courtesy of StockCharts.com

A break here could see MU stock target $40.00. But even so, Micron Technology, Inc. remains well off its record high of just below $100.00 during the technology craziness in early 2000.