Micron (MU +6.43%) stock popped on Friday, gaining nearly 5% after peer semiconductor company Sandisk crushed its Q3 earnings report.
Today, shares of both popular computer memory-makers are soaring again, and Micron in particular is up another 8.2% through 10:10 a.m. ET. Wall Street may be the reason.
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Wall Street loves Sandisk (and maybe Micron?)
In back-to-back reports, first Montclair, NJ-based stock research firm Fox Advisors raised its price target on Sandisk to $1,500 a share. No sooner had it done so, reports TheFly.com, than analysts at Bernstein predicted Sandisk will go to $1,750!
Neither firm raised its targets on Micron today, a Sandisk competitor that builds both NAND flash and DRAM (and HBM) memory. These two forms of memory are complementary but not interchangeable, and their demand can grow at different rates. According to a report by Tom's Hardware last month, for example, DRAM prices that led the charge earlier in the year are expected to grow "only" 63% in Q2, versus a 75% surge for NAND.
Bernstein agrees with reports of the NAND price surge, and this is better news for Sandisk than for Micron. But it's still pretty great news for Micron, too.
NASDAQ: MU
Key Data Points
What's next for Micron stock?
Computer memory prices have historically been cyclical. High prices (like today's) attract competition and convince producers (Micron included) to increase capacity and production, growing supply and driving prices lower in the future -- at which point the up cycle ends and the down cycle begins.
This creates risk for investors in both companies, but here's the thing: After surging more than 3,200% in price over the past year, Sandisk now trades at a heady 40 times trailing earnings. Micron, in contrast, costs only 25 times earnings.
For risk-averse investors, that makes Micron the safer stock to buy.
