Analyst raises estimates on Micron on higher prices, healthy demand; shares close up 6 percent

Monday, June 28, 2010

Micron shares rise on improved pricing, demand

PHILADELPHIA — Shares of Micron Technology Inc. rose 6 percent Monday as an analyst raised his revenue and earnings estimates on the company based on his belief that higher prices and healthy demand would lift results for this year and next.

Micron, which makes memory storage devices such as flash memory cards used in cameras and other consumer electronics, is scheduled to report third-quarter earnings after the closing bell.

THE SPARK: JMP Securities analyst Alex Gauna raised his 2010 revenue forecast to $10.24 billion from $10.18 billion and to $14.9 billion from $14.8 billion for next year. Gauna also increased his earnings estimate, after one-time items, by a nickel to $1.80 per share for 2010. For 2011, he bumped up his earnings forecast to $2.05 per share from $2.02 per share.

THE BIG PICTURE: Gauna said average pricing has increased by percentages in at least the mid- to high-single digits. He said manufacturers are concerned about supply and have therefore kept up “healthy” ordering trends.

THE ANALYSIS: He said customers upgrading their servers and notebook computers are leading to better-than-expected seasonal demand. Gauna kept his “Market Outperform” rating on the stock.

SHARE ACTION: Shares rose 56 cents, or 6 percent, to close at $10.02. Gauna thinks the stock can rise to $15 over the next 12 months.

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