Should you invest in Micron stock after BMO upgrade?

on Jun 30, 2021
  • Micron Technology stock popped 2.38% on Wednesday morning after a BMO upgrade.
  • Analysts said supply constraints coupled with rising demand in the memory chip market would boost the price.
  • The stock is now up nearly 9% since the start of last week. Is it time to buy?

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Micron Technology Inc. (NASDAQ:MU) shares popped 2.38% to trade at $84.90 on Wednesday morning before returning late to $83.67. The stock price received a boost after BMO Capital Markets analysts upgraded their rating from equal-weight (neutral) to overweight (buy) with a new price target of $110.00.

Analysts expect supply constraints coupled with rising demand to boost the stock price. 

Is Micron Technology stock a buy in July 2021?

From a valuation perspective, Micron Technology shares look significantly undervalued. The stock trades at a compelling forward P/E ratio of 7.82. The trailing P/E of 29.42 suggests that the share price has a lot of room to run in the next 12 months.

Street analysts expect Micron Technology earnings to grow by 90% next year and at an average of 63.66% in each of the next five years. Therefore, Micron is attractive to both value investors and growth investors.

The company reports earnings for the quarter ending May 2021 on Wednesday after markets close. Investors will be looking forward to the revenue and EPS performance alongside management guidance for the current year.

Source – TradingView

Technical overview: why buy Micron stock now?

Micron Technology is entering a period of high bottom-line growth. The stock price has already fallen significantly since April to reflect the expected earnings decline this year. Therefore, when earnings bounce back next year, MU shares will rally.

The stock appears to be facing some resistance from the 100-day moving average, but it is yet to hit overbought conditions in the 14-day RSI. As such, we could witness more upward movements in the coming months.

Investors can target short-term profits at approximately $88.87. Those optimistic of extended rallies can target profits at $91.94. On the other hand, short-term pullbacks will find strong support at $80.99 or lower at $77.45 in the event of extended declines.

Bottom line: Micron technology looks like an exciting buy in Q3 2021

Micron Technology’s latest buy recommendation from BMO will trigger a significant bull run. The company’s future looks compelling based on the earnings growth expectations.

In addition, its current forward P/E ratio of just 7.82 is an attractive feature that will boost the stock price in the coming months. Therefore, buying Micron Technology shares in Q3 2021 could yield significant returns heading to the tail end of the year.