Micron (NASDAQ:MU) stock has been surging this year, helped by soaring demand for its products. It is up by 285% this year, and 840% in the last 12 months, turning it into a $1.28 trillion company. With its earnings coming out on Wednesday, will it continue rising or falling?
Micron Stock Braces for Volatility Ahead of Earnings
MU stock has soared this year, mirroring the gains of companies in the memory industry like Samsung Electronics, SK Hynix, and Western Digital (NASDAQ:WDC).
This surge has accelerated because of the ongoing supply shortage, which has led to a surge in prices, a trend that may continue over time. As a result, its revenue growth has accelerated, with the second quarter figure rising by 75% QoQ to $23 billion. This increase was up by 196% from the same period last year.
Its Dynamic Random Access Memory (DRAM) business made over $18.8 billion, up by 207% YoY. Similarly, NAND, which includes its SSD and USB solutions, made $5 billion, up by 169% YoY.
Analysts are upbeat about its upcoming results, helped by its guidance. The expectation is that its upcoming results will show that its revenue jumped by 276% YoY to $35 billion. It will then rise by 269% in the next quarter. As a result, the annual revenue this year is expected to grow by 203% to $113 billion, followed by $190 billion in the next financial year.
Most notably, this revenue growth is happening at a time when its margins are soaring. Its net profit margin soared to 57.7% from 28% last year, and this figure may soar to over 60% in the next financial year.
Analysts are optimistic that the MU stock has more gains to go this year. Stifel Nicolaus, Deutsche Bank, and Cowen analysts expect that its stock will jump to $1,500. Rosenblatt and Wells Fargo see the stock soaring to over $1,220.
In addition to its strong revenue growth, the company is still trading at a bargain. It has a forward P/E ratio of 18, lower than the S&P 500 Index average of 23, and its sector median of 32.
MU Stock Just Invalidated a Key Risky Pattern
The daily chart shows that Micron shares have just jumped above the crucial resistance at $1,087. Moving above that level shows that it has invalidated the double-top pattern whose neckline is at $854.
Micron has also moved to the overshoot level of the Murrey Math Lines tool. This means that it has some more upside, potentially to the extreme overshoot level of $1,250. On the other hand, a drop below the ultimate resistance at $1,000 will invalidate the bullish outlook.
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