Micron Technology is the IBD Stock Of The Day as the memory-chip maker appears well positioned if the market turns positive soon. MU stock has formed a base, but has been bobbing around a key support level.
According to IBD MarketSmith charts, MU stock has formed a cup-with-handle base with a buy point of 96.60. But Micron stock been struggling to find support at its 50-day moving average line amid the current market turmoil. For the last five sessions, MU stock has traded above and below that key support level.
On the stock market today, MU stock fell 2.9% to close at 86.26.
With the market in correction, investors should be cautious. IBD recommends building stock watchlists during downturns to prepare for the market's eventual recovery. Be sure to check out IBD's Big Picture column for the current market direction.
MU Stock Broke Out After Last Earnings Report
On Dec. 21, Micron stock broke out of a cup-with-handle base at a buy point of 89.15, according to MarketSmith charts. It climbed to an all-time high 98.45 on Jan. 5 before retreating when the market turned south.
That breakout occurred the day after Micron beat Wall Street's targets for its fiscal first quarter and guided higher for the current quarter. Micron earned an adjusted $2.16 a share on sales of $7.69 billion in the quarter ended Dec. 2. On a year-over-year basis, Micron earnings surged 177% while sales climbed 33%.
For the current quarter, Micron forecast adjusted earnings of $1.95 a share on sales of $7.5 billion. That would translate to year-over-year growth of 99% in earnings and 20% in sales.
DRAM Pricing Outlook Favorable For Micron
Last week, Citi analyst Christopher Danely reiterated his buy rating on MU stock with a price target of 120.
In a note to clients, Danely said pricing for dynamic random-access memory, or DRAM, is looking more favorable starting in the second quarter.
"Our channel checks indicate continued pricing improvements in DRAM," Danely said. "We expect DRAM average selling prices to be down low-to-mid single digits quarter over quarter in Q1 2022 and flat to up quarter over quarter in Q2."
He also expects DRAM shortages in the second half of the year, which should boost pricing.
Boise, Idaho-based Micron makes two main types of memory chips: DRAM and Nand. DRAM chips act as the main memory in PCs, servers and other devices, working closely with central processing units. Nand flash provides longer-term data storage.
MU stock ranks first out of 10 stocks in IBD's Computer-Data Storage industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 96 out of 99. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
