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Home / Business / Micron is on the way to new record levels as investors spur massive share buybacks

Micron is on the way to new record levels as investors spur massive share buybacks



Micron Technology Inc.'s shares rose on Tuesday, bringing them to another all-time high as analysts assessed the company's investor day and welcomed the news that they were offering a $ 10 billion share repurchase as part of a $ 10 billion buyback the Fund plans to revert to wider funds.

The stock

MU, + 5.75%

rose 8% in early trading to a high of $ 59.98, topped by S & P 500 gainers. The stock was already up 4% on Monday, having raised its forecast for the current quarter.

The buyback news "is a big vote of confidence in the strength of the business model," wrote Ruben Roy at MKM Partners.

"Micron held an optimistic and well-attended analyst day where management highlighted market trends that will drive continued demand for growing memory density growth in a wide range of end-use applications," Roy wrote in a statement, repeating his purchase valuation of the stock ,

Micron manufactures Dynamic Random Access Memory (DRAM), chips commonly used in PCs and servers, as well as NAND chips, Flash memory chips used in USB drives, and smaller devices such as digital cameras.

The company highlighted challenges with capacity expansions as the storage industry continues to move towards more difficult manufacturing process technologies. The company was able to improve its cost structure with realized operational improvements of $ 6 billion compared to fiscal year 201

6 through fiscal 2018, and plans to spend another $ 3 billion by 2021, Roy said.

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Analysts have raised their price target from $ 65 to $ 72, which is 22% above its value corresponds to current trading level.

Stifel analyst Kevin Cassidy said it was clear from the meeting that Micron's implementation of his strategy and end markets was in good shape. Regarding the capacity issue, Cassidy said management raised investor concerns by stating that the capacity increase is limited bit by bit to 20% for DRAM and 40% to 45% for NAND Flash despite rising capital expenditures [19659002] " We continue to recommend the MU shares as the market will eventually believe that the storage market has changed, "he wrote. Cassidy also rated the stock with a purchase and raised its price target from $ 101 to $ 106.

JP Morgan analyst Harlan Sur said he also sticks to his overweight, the equivalent of buy.

"Our focus is on Micron performing well in its production schedules, and the cost / competitive gap with its core business closes competitors in a constructive supply / demand environment that leads to strong free cash flow generation, resulting in that the team is introducing a strong capital repayment program, "wrote Sur.

The $ 10 billion share buyback program and commitment to return more than 50% of free cash flow to investors is more than most investors expect, he said.

"We remain overweight Micron as we believe that the fundamentals of the business during our model period and expectations of the solid technology, product and manufacturing execution by the Micron team remain favorable," he said.

See: Intel's latest push: Driving the Internet of Things

Other chip inventories were also higher. KLA-Tencor Corp.

KLAC, + 1.28%

was 1.9% higher, Lam Research Corp.

LRCX, + 1.99%

was 3.5% higher. Nvidia Corp.

NVDA, -1.22%

resisted the trend towards trade by 0.8%.

Micron shares have risen 98% over the last 12 months, while the S & P 500

SPX, + 0,06%

gained 14%.

The Philadelphia Semiconductor Index

SOX, + 0.72%

gained 28%.

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