Micron Stock Climbing Alongside Chip Sector

Micron's competitor, Advanced Micro Devices, was upgraded by Piper Sandler

May 17, 2022 at 11:38 AM
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Micron Technology, Inc. (NASDAQ: MU) is getting a halo lift this afternoon on the back of a rally for the semiconductor sector. Piper Sandler just recommended buying the dip on sector peer Advanced Micro Devices (AMD), which in turn has sent MU up 3.6% to trade at $73.02 at last check.

The stock looks to be staging a bounce off its $66 level, which has served as a floor on the charts since MU's break above here in late 2020. However, MU will have to contend with recent pressure at the $74 mark and 50-day moving average if it wants to maintain this rally and chip away at its 22% year-to-date deficit.

mu may 17

Analysts remain bullish on MU. Of the 16 in coverage, only two call it a "hold," compared to 14 "strong buy" ratings. What's more, the 12-month consensus price target of $110.42 is a 51.2% premium to current levels. 

Moreover, the semiconductor stock's fundamentals provide a great deal for investors to be excited about despite Micron stock’s bearish form. Although MU previously saw consecutive years of top- and bottom-line declines between fiscal 2018 and fiscal 2020, signs point towards a successful recovery for the business. Since fiscal 2020, Micron has increased its annual revenues and net income. In addition, MU is estimated to grow revenues by 21.5% and earnings by 57.8% for fiscal 2022. The semiconductor name is also estimated to increase revenues by 20.2% and earnings by 31.1% for fiscal 2023, signaling high growth rate expectations.

MU currently holds a solid balance sheet with $10.12 billion in cash and $7.67 billion in total debt, adding a layer of security for the business. Micron stock also offers an intriguing valuation, trading at an attractive forward price-earnings ratio of 5.77 and a price sales ratio of 2.47, suggesting that MU is undervalued at the moment.

 
 

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