Micron (MU) Hits a 52-Week High on Positive Q1 Guidance

Shares of Micron MU hit a new 52-week high of $34.85 during Monday's trade but cooled off to close at $34.50. The closing share price represents an extraordinary one-year return of 97.5% and a year-to-date return of 59.3%.

Moreover, shares have been trending up since the company reported the fourth-quarter results on Sep 25. Micron reported modest fourth-quarter fiscal 2014 results. While the top line surpassed the Zacks Consensus Estimate, the bottom line matched the same. Year-over-year revenues also compared favorably.

The company also provided encouraging guidance. For the first quarter of fiscal 2015, Micron expects revenues in the range of $4.45 to $4.7 billion, up sequentially..

Micron expects DRAM ASPs to be up in low single-digits for the forthcoming quarter. On a sequential basis, projected bit cost is expected to be down in low single-digit, whereas bit growth is expected to be up in mid-to-high single digits. The positive DRAM market conditions and growing DRAM mobile volumes led to an upbeat DRAM guidance for the upcoming quarter.

Moreover, Micron is positive about its product launches and growing demand for its products, particularly SSD products. Micron has been constantly innovating in memory technologies, spanning DRAM, NAND and NOR Flash memory solutions, which are being widely used in the latest mobile computing devices as well as in consumer, networking and embedded products.

Additionally, we believe that the acquisitions of Elpida and Rexchip (now known as Micron Memory Japan, Inc. and Micron Memory Taiwan Co., Ltd., respectively) will boost Micron's share in the memory market. The acquisitions also added Apple Inc. AAPL to the customer roster, which is a positive for growth.

However, it may not be easy for Micron to capture share from SanDisk Corp, SNDK — a key player in the NAND space. Nevertheless, with support from Apple and Intel Corp. INTC, its prime NAND customers, the situation might turn in Micron's favor, going forward.

Currently, Micron has a Zacks Rank #3 (Hold).