Micron is strong at $70 support but approaches the stock with caution

Micron Technology, Inc. (NASDAQ:MU) is a beaten-down stock year-to-date. The stock has lost 25% year to date. However, optimism has been building for Micron. The stock has held to key support of around $70 since March. Investors have been looking for cues to take the stock higher.

However, a late downgrade on Friday pushed the stock down 7%. Piper Sandler analysts gave an underweight rating, with a $70 price target. This is from a neutral rating with a $90 target. The analysts cited substantial exposure to consumer electronics in the downgrade. 

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Ahead of third-quarter earnings on June 30, investors are highly optimistic about Micron. Investors have a consensus of $2.34 EPS in the quarter. The expectation comes after Micron beat earnings estimates in the second quarter. The company reported an EPS of $2.14 in the second quarter, higher than projections of $1.98. Micron’s own estimates put EPS in the third quarter at $2.36 to $2.56. 

On Wall Street, Micron has varying ratings, pointing to a stock rise. Wedbush has an “outperform” rating from “neutral.” Susquehanna has a buy rating with a $115 target price. Mizuho has a buy target of between $110 to $113. The ratings were before the downgrade by Piper Sandler. 

Micron stock is jumping after holding at key support

Technically, Micron stock has kept the $70 support intact. However, the latest downgrade is dampening sentiment. If the company meets or exceeds guidance, we expect a further upside move. Further bearish weakness could see the stock claim the $57 support.

Summary

We expect Micron to remain at or close to $70 ahead of earnings. Strong earnings and/or guidance will push the stock higher. We urge patience before buying. The stock should be bought if the $70 holds while earnings come strong.

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