Micron Raised to Strong Buy - Analyst Blog

On Mar 12, Zacks Investment Research upgraded Micron Technology Inc. MU to a Zacks Rank #1 (Strong Buy). With a strong return of 166.5% over the past one year and positive estimate revisions over the last 60 days, Micron is an attractive investment opportunity.

Why the Upgrade?

Over the last 60 days, Micron witnessed three upward revisions for the current quarter. The Zacks Consensus Estimate for the current quarter went up by a cent to 59 cents over the same period of time.

The current optimism surrounding the stock can be attributed to some extent to the acquisitions of Rexchip and Elpida, which will benefit Micron's share in the memory market. Moreover, the Elpida acquisition also brought Apple Inc. AAPL on to the customer roster, which is a huge positive for the company.

According to management, DRAM supply growth is expected to decrease from 23.0% in 2013 to 22.0% in 2017. NAND supply is expected to decline from 43.0% in 2013 to 28.0% in 2017. On the other hand, demand for both DRAM and NAND is expected to increase significantly at CAGRs of 27.0% and 38.0%, respectively, through 2017.This supply/demand scenario is also a positive and should support prices.

Additionally, Micron reported encouraging first quarter fiscal 2014 results with both the top and bottom line surpassing the Zacks Consensus Estimate and increasing year over year. The results were primarily boosted by the Elpida acquisition and an increase in memory chip prices.

It is worth noting that Micron's Hybrid Memory Cube HMC, aimed at innovation in memory technologies, is primarily for supercomputer systems. HMC will help to simplify complexities and deliver greater reliability for supercomputers and lower technology costs for Micron customers.

However, it may not be easy for Micron to capture share from SanDisk Corp SNDK, a key player in the NAND zone.

Another Stock That Warrants a Look

Another stock worth considering in the technology sector is Lexmark International Inc. LXK,which sports a Zacks Rank #1 (Strong Buy).