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Micron leads chip-stock revival

Micron missed estimates three weeks ago, but now it's riding a wave of new investor enthusiasm
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Written by Larry Barrett, Contributor on

Micron Technology shares charged up 13 3/16, or 11 percent, to 128 Wednesday after a pair of brokerage firms upgraded the chipmaker. It was one of several chip stocks making strong gains.

Banc of America Securities raised its rating from a "market perform" to a "strong buy" while Robertson Stephens hiked it from a "buy" rating to a "strong buy".

Robertson Stephens also set a 12-month price target of $200 (£124) a share.

All this enthusiasm comes less than three weeks after Micron missed Street estimates by 16 cents a share in its second quarter. In the quarter, it earned $161m, or 58 cents a share, on sales of $1.4bn. Lower DRAM margins were largely responsible for the shortfall.

Among other leading chip stocks, Advanced Micro Devices (AMD) moved up 4 1/8 to 65 1/4 after telling the Street expects first-quarter sales in excess of $1bn; Rambus added 10 to 219; Altera shot up 3 15/16 to 89 3/16 and Intel slipped 1/2 to 132 1/4.

First Call consensus expects Micron to bounce back with a profit of 55 cents a share in its third quarter. Micron, which also announced a 2-for-1 split last month, hit a 52-week high of 143 1/8 in March after bottoming out at 34 1/4 in May.

Eighteen of the 24 analysts following the stock maintain either a "buy" or "strong buy" recommendation.

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