Micron Stock Snags Bull Note Ahead of Earnings

BMO upgraded the equity and lifted its price target

Deputy Editor
Jun 30, 2021 at 12:33 PM
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Chip name Micron Technology, Inc. (NASDAQ:MU) is moving higher today on a pre-earnings bull note. Specifically, BMO upgraded the equity to "outperform" from "market perform" and lifted its price target to $110 from $90, just ahead of the company's fiscal first-quarter earnings report, due out after the close today. Below, we'll dig into MU's technical setup ahead of the event, as well as how the security has fared after earnings in the past.

Regarding analysts' outlooks, Micron stock's 12-month consensus target price of $118.82 is a 41.3% premium to its current perch of $84.12, up 1.4% on the day, and represents territory never before seen by the semiconductor name. Meanwhile, 17 brokerages in coverage call the equity a "buy" or better, and just three say it's a "hold" or worse.

This optimism should come as no surprise either, as MU has a history of positive post-earnings movements. In fact, just three of its last eight post-earnings moves were negative, and the equity managed a nearly 5% next-day pop on in April. This time around, the options market is pricing in an 8% swing for Friday's trading, regardless of direction, which is slightly larger than the 6.5% move the equity has averaged over the past two years.  

Drilling down today's options activity, there's been an uptick of bullish bets. At midday, 127,000 calls have exchanged hands -- triple the intraday average -- compared to 34,000 puts. The most popular contract by far is the weekly 7/2 85-strike call, where new positions are opening. This means traders are expecting some upside for Micron stock by the time the contract expires on Friday.

On the charts, MU boasts a respectable 62.8% year-over-year rise. The equity recently bounced back from its June 21 five-month low of $75.71, and broke out past pressure from the 50-day moving average. Should tomorrow's earnings reaction stay in line with the positive trend, Micron stock could finally break above two months of pressure from the 100-day trendline.

MU Chart June 30


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