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Micron Technology, Inc. (NASDAQ: MU ) zapped higher after a Citigroup analyst gave a bullish note on MU stock.
The Citi report on Micron stock noted that the PC market has shown consistent strength in second-quarter of 2017, which will have a positive impact on MU stock.
That's saying something, since shares of Micron stock are already up more than 40% this year.
Per the analyst, overall notebook shipment grew 7% on a sequential basis in the second quarter, which is way above the anticipated growth rate of 4%. Citi also added that the firm expects ODM notebook shipments to grow 6% in third-quarter 2017.
The firm also quoted that 20% of total DRAM production is consumed by the PC end market. An increase in PC shipment will definitely raise the demand for DRAM. Due to higher demand, along with limited supply, the firm expects DRAM prices to remain strong in the near term and help Micron stock.
Strength in PC demand and increasing DRAM prices will eventually benefit Micron in our opinion, as MU stock generates approximately 25% of its revenues from selling DRAM to the PC end market.
The bullish note by Citi raised investors' confidence on Micron, sending the stock up nearly 2.9% yesterday. Notably, at yesterday's close price of $31.37, the stock has returned 43.1% in the year-to-date period, outperforming the Zacks categorized Electronics-Semiconductor industry's gain of just 15.3%.
It should be noted that this is not the only analyst who is optimistic on Micron stock growth prospects. A number of other industry experts also believe that total demand for DRAM could surpass manufacturing capacity, leading to a periodic shortage and higher pricing in the near term. We believe that any increase in prices will have a favorable impact on the company's top line, the benefit of which is likely to flow down to the bottom line.
Looking at the aforementioned factors, along with strategic initiatives, that includes acquisitions and expansion in the SSD market, we consider that Micron is one such technology stock which is worthy of remaining in investors' portfolio.
Currently, Micron sports a Zacks Rank #1 (Strong Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
