Why Did Micron Stock Rise Last Week?



Micron announced fiscal 1Q17 results

Micron’s (MU) stock rose 14.8% in the week ended December 23, 2016. Micron’s stock has risen over 60% this year after a disappointing 2015 when shares fell 58%. The firm announced its fiscal 1Q17 results last week and announced non-GAAP (generally accepted accounting principles) earnings per share (or EPS) of $0.32 compared to $0.29 in fiscal 1Q16. Revenue for the firm rose 19% YoY (year-over-year) and 23% quarter-over-quarter in fiscal 1Q17 to $3.97 billion. Analysts expected revenue of $3.98 billion and EPS of $0.28.

In fiscal 4Q16, Micron reported EPS of -$0.01. Micron is optimistic about fiscal 2Q17 and expects revenue between $4.35 billion and $4.7 billion with EPS in the range of $0.58 to $0.68. In comparison, analysts expect the firm to post revenue of $3.9 billion with EPS of $0.39 in fiscal 2Q17.

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Increase in PC DRAM prices

Micron’s CEO, Mark Durcan, stated that increased demand for products has positively impacted the firm’s revenues. The ASP (average selling price) of PC DRAM (dynamic random access memory) has risen between 50% and 60%.

Micron’s revenue almost doubled in fiscal 2014 after the industry was hit by a DRAM (dynamic random access memory) supply shortage. Competitors also took advantage of this situation and boosted production to meet the growing demand. However, demand fell significantly in fiscal 2015 and 2016, which caused oversupply. The situation worsened to such an extent that Micron slipped into the red in fiscal 2016.

The market conditions for DRAM are improving now that Samsung (SSNLF) and SK Hynix have suspended their DRAM production to focus on NAND. This has reduced supply, while the demand for DRAM has increased. Micron is seeing increasing demand for its high-end DRAM products from Nvidia (NVDA).


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