Why Micron Technology Inc. Shares Could Keep Flying to $40

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Micron Technology  (NASDAQ: MU  ) rallied 2.5% this morning after Bank of America upgraded the semiconductor company from underperform to buy.

So what: Along with the two-notch upgrade, analyst Simon Dong-je Woo boosted his price target to $40 (from $22), representing about 35% worth of upside to yesterday's close. So while contrarian traders might be turned off by Micron's steady price strength over the past year, Dong-je Woo's call could reflect a sense on Wall Street that its growth prospects still aren't fully baked into the valuation.

Now what: According to B of A, Micron's risk/reward trade-off is particularly attractive at this point. "In our view, key catalysts are solid chip pricing environment (tight supply) and cost competitiveness," said Dong-je Woo. "Lower cyclical risk and higher shareholder return [should] lead to bigger EVA (WACC down vs ROE up)." Of course, when you couple Micron's still-significant debt load with its red-hot stock price -- now up a whopping 150% from its 52-week lows -- I'd hold out for a much wider margin of safety before betting on that bullishness.

Are you ready for this $14.4 trillion revolution?
Have you ever dreamed of traveling back in time and telling your younger self to invest in Apple? Or to load up on Amazon.com at its IPO, and then just keep holding? We haven't mastered time travel, but there is a way to get out ahead of the next big thing. The secret is to find a small-cap "pure-play" and then watch as the industry -- and your company -- enjoy those same explosive returns. Our team of equity analysts has identified one stock that's ready for stunning profits with the growth of a $14.4 TRILLION industry. You can't travel back in time, but you can set up your future. Click here for the whole story in our eye-opening report.


Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 11, 2014, at 1:34 PM, youngblood58 wrote:

    Bought in at just over $25/share and looking for this stock to move up to $35/share. I don't think it will fly up beyond that without another great quarterly report and/or other significant news.

    We'll see.

    I think this stock could mimic the success we saw with stocks like Seagate and Western Digital a couple years ago.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2990602, ~/Articles/ArticleHandler.aspx, 10/20/2014 2:21:12 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement