Shares of Micron Technology (MU -4.61%) went up 16.9% in February, according to data provided by S&P Global Market Intelligence. The stock even approached all-time highs achieved way back during the dot-com bubble of 2000. Here's why: The semiconductor industry is showing signs of strength, and some Wall Street analysts believe this could keep fueling gains for Micron stock.
Micron makes two kinds of memory products, but dynamic random access memory (DRAM) is its most important, accounting for 72% of total revenue for fiscal 2020. While DRAM products are generally in high demand, occasional oversupply in the industry can lower average selling prices and hurt Micron's revenue. But that's just part of the normal cycle of the semiconductor industry.
During February, the signs pointed more and more to a recovering DRAM market. For example, Micron peer Samsung Electronics said in its financial release, "DRAM market highly likely to recover in 1H21 [first half of 2021] due to solid demand from mobile/server." This improving industry outlook led many analysts to raise their price targets for Micron stock during the month. This includes a Citi analyst who believes Micron can eventually reach a whopping $150 per share, according to The Fly.
Micron kicked off March by confirming the bullish sentiment on Wall Street. The company isn't scheduled to report results for the second quarter of fiscal 2021 until March 31. However, management just raised its guidance for Q2. Previously, it guided for revenue of $5.6 billion to $6 billion and diluted earnings per share (EPS) of $0.34 to $0.48. With its updated guidance, management now expects to report revenue of $6.2 billion to $6.25 billion and EPS of $0.51 to $0.56. Those are substantial raises to guidance and seem to confirm improvements to the semiconductor industry.