Micron Technology Could Test Bull Market High

Micron Technology Inc. (MU) beat fiscal Q3 2020 estimates at the end of June, earning $0.82 per-share while revenues rose 13.6{cb3fe4c54de06d7c4b8dceae281fb32e521027d1659af7adec2f427d2f5333d9} to $5.44 billion. The memory chip giant capped off the bullish presentation by guiding Q4 EPS and revenues above consensus, even though the company admitted that 2020 demand for smartphones, consumer electronics, and automobiles has been reduced by the COVID-19 pandemic.

Micron Technology Benefiting From Secular Trends

PHLX Semiconductor Index has outperformed broad benchmarks by a wide margin so far in 2020, completing a round trip into the first quarter high in June. It broke out at month’s end and has added to gains at a steady pace in the last three weeks, posting an all-time high above 2,100. Advanced Micro Devices Inc. (AMD), NVIDIA Corp. (NVDA), and other widely-held chip stocks have underpinned the upside, which is showing no signs of rolling over.

Needham raised their Micron Technology price target from $63 to $70 after the news, with analyst Rajvindra Gill commenting that MU expects, “data center demand to remain healthy and mobile to continue to improve”. He also notes that “although we acknowledge that near-term visibility across end markets is limited due to COVID-19 & macro uncertainties, we view MU as a key beneficiary of secular trends of higher memory content in 5G handsets and data center demand.”

Wall Street And Technical Outlook

Wall Street has grown increasing bullish since the earnings report, lifting the consensus rating to ‘Moderate Buy’, based upon 18 ‘Buy’ and 7 ‘Hold’ recommendations. Just a single analyst now recommends that shareholders sell their positions and move to the sidelines. Price targets range from a low of $35 to a street high $100 while the stock is now trading more than $12 under the median $66 target. This placement bodes well for higher prices in coming months.

Micron Technology has been rangebound since posting an 18-year high in the mid-60s in the second quarter of 2018. It sold off into the upper 20s at year’s end and has been trading between those boundaries for the last 19 months. The stock has recouped about two-thirds of the losses posted in the first quarter and is now carving a bullish consolidation on top of the 200-day moving average, indicating a small catalyst could ignite a rally up to range resistance.

This article was originally posted on FX Empire


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