Shares of Micron Explode Higher Thanks to Soaring DRAM, NAND Prices

Both DRAM and NAND trade like any other commodity. When $MU struggled most, it was due to oversupply of the DRAM and NAND memory markets — which later caused them to miss earnings.

With the merger of Elpida and Micron, the company is second to only Samsung in the DRAM market and fourth in NAND.

As you can see, the share price of Micron correlates tightly to the pricing of DRAM and NAND memory.

Reports Q2 (Feb) earnings of $0.90 per share, $0.04 better than the Capital IQ Consensus of $0.86; revenues rose 58.4% year/year to $4.65 bln vs the $4.65 bln Capital IQ Consensus.

The increase in the company’s revenues of 17 percent for the second quarter of fiscal 2017 compared to the first quarter of fiscal 2017 was due primarily to a 21 percent increase in DRAM average selling prices and an 18 percent increase in trade NAND sales volumes. The company’s overall consolidated GAAP gross margin of 36.7 percent for the second quarter of fiscal 2017 was 11.2 percentage points higher compared to the first quarter of fiscal 2017 primarily due to increases in DRAM average selling prices and manufacturing cost reductions for both NAND and DRAM.

Co issues upside guidance for Q3, sees EPS of $1.43-1.57, excluding non-recurring items, vs. $0.93 Capital IQ Consensus Estimate; sees Q3 revs of $5.2-5.6 bln vs. $4.52 bln Capital IQ Consensus Estimate.

That a massive guided up for Q3. Another major player that might benefit from this move is $WDC, especially since they recently acquired Sandisk, the number 3 players in NAND.

Look for 2014’s highs to be taken out.