Analyst: Micron Stock Is "Extremely Cheap"

MU remains stuck below recent resistance, though

by Patrick Martin

Published on Sep 14, 2018 at 3:03 PM

Despite a recent chip stock sell-off and downgrade earlier in the week, Micron Technology, Inc. (NASDAQ:MU) stock is trading 1.7% higher today at $44.38 after receiving some bullish analyst attention ahead of the company's fiscal fourth-quarter earnings report next Thursday, Sept. 20. Specifically, Credit Suisse reiterated its "buy" rating and $90 price target -- double current trading levels. The analyst in coverage called the stock's recent dip a good buying opportunity, and said Micron's valuation is "extremely cheap."

On the charts, MU has given back 24% in the past three months, and earlier this week fell to its lowest point since February. The shares had the makings of a rally near the end of August, but were promptly rejected by their 50-day moving average, a trendline that emerged as resistance following a late-June bear gap.

micron stock daily chart sept 14

Nevertheless, analysts are firmly entrenched in the bullish camp. Of the 26 brokerages covering the security, only six rate it a "hold," with zero sells on the books. Furthermore, MU's average 12-month price target of $80.10 is an 80.6% premium to the stock's current perch. 

The optimism is seen in the options pits, too, with peak levels of open interest currently found at the September and October 55 calls. Data from the major options exchanges confirms significant buy-to-open activity at each strike, meaning speculative players are betting on a breakout north of $55 over the next five weeks.

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