On Dec 11, Zacks Investment Research upgraded Micron Technology Inc. (MU) to a Zacks Rank #1 (Strong Buy). The semiconductor company has seen a phenomenal appreciation in its share prices. Micron’s shares are up 239.4% year to date while it has an outstanding one-year return of 235.2%.
Why the Upgrade?
Some of the current optimism surrounding the shares is related to the settlement of a long-standing dispute with technology licensing company Rambus Inc. (RMBS). Per the settlement terms, Micron can use Rambus’ patented technology for its integrated circuit products for an initial period of seven years. In return, the company will pay royalty of up to $10.0 million a quarter, or $40 million over 12 months, totaling $280 million over the contract period.
Now that all the issues have been settled, Micron will save on the legal fees which will lower its expenses. Moreover, the company will leverage Rambus’ patents to bring forth more innovative technological solutions for end users.
Lately, Micron has been in the news for all the good reasons. The company’s shares hit a new 52-week high of $23.67 on Dec 9. Reportedly, Greenlight Capital, David Einhorn's hedge fund, acquired a large number of Micron’s shares, taking its total holdings to 23.02 million shares. The share purchase was primarily due to Micron’s innovations in memory technologies, spanning DRAM, NAND and NOR Flash memory solutions. These are being widely used in the latest mobile computing devices as well as in consumer, networking and embedded products.
Apart from these positive factors, Micron has been constantly launching new and innovative storage solutions as well. Recently, the company launched a 45-nm MT25Q SPI NOR Flash device. This new MT25Q product offers a more flexible, efficient and cost effective solution, and can be used in industrial applications as well as in consumer, networking and embedded products.
Micron has also announced its decision to adapt its Hybrid Memory Cube (HMC) for supercomputer systems. This is aimed at further innovation in memory technologies. HMC will help in simplifying complexities and delivering greater reliability for supercomputers and lowering technology costs for Micron customers.
Additionally, the company has developed a new computing architecture — Automata Processor (AP) — which enables high-speed execution and reduces the complexities of unstructured data. Additionally, the acquisition of Elpida positively impacted the company by bringing Apple (AAPL) onto the customer roster.
These factors culminated in the Zacks Rank upgrade on Micron shares.
Another well-placed company in the Technology space is SanDisk Corp (SNDK) which also carries a Zacks Rank #1.