Chipmaker Showered With Price-Target Hikes on $10 Billion Share Buyback

Micron shares are set for their highest close since March

Emma Duncan
May 22, 2018 at 10:04 AM
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Chip stock Micron Technology, Inc. (NASDAQ:MU) is soaring this morning, after the company last night said it approved a plan to buy back up to $10 billion in shares of its common stock. The news hit just hours after Micron upped its current-quarter earnings guidance. In response, MU stock has received no fewer than seven price-target hikes this morning, with the most notable coming from Rosenblatt Securities (to $115 -- more than double the equity's Monday close) and Stifel (to $106).

MU stock is up 7.8% at $59.79, at last check, set for its highest close since mid-March, when the shares were just off a 17-year high of $63.42. The tech concern has had a great year overall, more than doubling over the past 12 months, with pullbacks contained by its 160-day moving average.

Even before today, analyst sentiment was overwhelmingly optimistic on MU, with 20 of the 24 brokerage firms following the stock sporting "buy" or "strong buy" recommendations. This mood also remains evident with the chipmaker's average 12-month price-target coming in at $75.97 -- a 28% premium to current levels.

In the options pits, MU's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 0.33. While this indicates that bought calls have exceeded bought puts on an absolute basis, the ratio sits in the 79th percentile of its annual range, suggesting MU puts have been purchased over calls at a faster-than-usual clip during the past two weeks.

Echoing this, Micron stock's Schaeffer's put/call open interest ratio (SOIR) of 0.75 ranks in the 98th percentile of its annual range. Though the ratio indicates that short-term calls still outnumber puts on an absolute basis, the elevated percentile tells us that near-term traders have rarely shown a greater preference for puts over calls in the last year.


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