Shares of Micron Technology Inc. (MU) hit a new 52-week high of $21.19 on Nov 27, eventually closing at $21.17. This continues the recent uptrend in the price of the shares, which are now up around 21.0% over the past one month. The closing share price also represents an extraordinary one-year return of 258.2% and a year-to-date return of 219.3%.
Some of the current optimism surrounding the shares is related to David Einhorn's hedge fund Greenlight Capital, which recently 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.
Micron recently 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 to simplify complexities and deliver greater reliability for supercomputers and lower technology costs for Micron customers.
Additionally, the company has also developed a new computing architecture, Automata Processor (AP), which enables high-speed execution and reduces the complexities of unstructured data.
The other positive factor for Micron is the Elpida acquisition, which is increased wafer manufacturing capacity by approximately 50%, helping it to capitalize on any demand shortage. The acquisition also brought Apple onto the customer roster, which will be a positive for growth at Micron.
The company is also optimistic about supply/demand balance for DRAM and NAND memory chips in 2013 and 2014, which should support prices.
Moreover, Micron reported revenues of $2.84 billion for the fourth-quarter of fiscal 2013, up 44.8% on a year-over-year basis. Micron reported a 50% sequential increase in its revenues from its DRAM products, with both volumes (up 42%) and average selling prices (ASPs) (up 5%) contributing.
However, it may not be easy for Micron to capture share from SanDisk Corp (SNDK) a key player in the NAND zone. Nevertheless, with support from Apple Inc. (AAPL) and Intel Corp. (INTC), its prime NAND customers, the situation could turn in Micron’s favor going forward.
Currently, Micron carries a Zacks Rank #3 (Hold).