Analysts Flock to Micron Stock After Earnings Beat

MU options buyers were bearish ahead of the report

Managing Editor
Mar 21, 2019 at 10:10 AM
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Micron Technology, Inc. (NASDAQ:MU) stock is up 7.5% to trade at $43.13, after the chipmaker reported a fiscal second-quarter earnings and revenue beat. However, while the company expects a memory chip recovery later this year, its current-quarter sales forecast came in lower than expected.

Despite the upward price action, the analyst reaction has been all over the place. Three brokerages issued price-target hikes, including to $64 from $55 at J.P. Morgan Securities. However, Citigroup downgraded MU to "sell" from "neutral," while Stifel and Morgan Stanley trimmed their price targets to $60 and $32, respectively. 

The divisive takes today are indicative of the general analyst sentiment. Of the 26 brokerages covering MU, 15 rate it a "strong buy," and 11 rate it a "hold" or "strong sell." Plus, its consensus 12-month price target of $46.89 is an 8% premium from its current perch.

Options traders were more bearish than usual ahead of earnings. Currently, MU sports a 10-day put/call volume ratio of 1.11 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 95th percentile of its annual range, meaning long puts have outnumbered calls by a bigger-than-usual margin in the past two weeks.

Echoing this, MU's Schaeffer's put/call open interest ratio (SOIR) sits at 1.87 and ranks in the 100th percentile of its annual range. This shows a much stronger-than-usual put-skew among near-term options open interest.

On the charts, Micron stock has added nearly 40% in the last three months. Today's pop has MU shares on track to topple their 160-day moving average, a trendline that kept a lid on a tariff-related breakout last month.

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