Will Apple's (AAPL) iPad 2 Drive Further Growth for Micron (MU)?

March 3, 2011 2:22 PM EST Send to a Friend
Micron Tech (NYSE: MU) is showing some life today, following the introduction of Apple's (Nasdaq: AAPL) iPad 2 yesterday.

NAND-maker Micron Technology is one of the go-to's today, shares popping 4.2%, and trading near intraday highs this afternoon. Micron is expected to provide the lions' share of memory chips in Apple's new, products, and the introduction of the iPad 2 is flashing dollar signs in front of investors. The stock has been on an upward trend since their last quarterly earnings report on December 22, 2010, though they've been on somewhat of a pullback over the last several days. The stock is also re-nearing its 52-week high of $11.95, a mark it set in mid-February.

Seeking Alpha recently pointed out that shares are among the cheapest in the semiconductor arena. Our calculations have it with a forward P/E of 9.5x FY12 EPS estimates, compared with 9.9x at Intel (Nasdaq: INTC), 16.5x for NVIDIA (Nasdaq: NVDA), and 10.8x at Marvell (Nasdaq: MRVL).

Going back to Apple, one Standard & Poor's analyst has Apple now selling over 26 million iPad units in FY11...that's a lot of chips! Additionally, Wedbush sees the iPad 2 driving NAND sales, and rates Micron and Outperform.

So is it too late to get into Micron? Well, as said, shares are trading at a new 52-week high today, though the stock has been north of $18 through 2007. Analysts are still overall bullish on the shares, and the last four quarterly reports have added upside to the shares, even if just for a day or two.

Additionally, Micron shares have already gained over 44% since the start of 2011.

But the growth may continue for Micron. iSuppli recently forecast that NAND revs are expected to climb 18% to $22 billion in 2011, and even better than that in FY12 - FY14. iSuppli notes that 2010's $18 billion revenue mark was a record for the segment. Couple with expected iPad sales (and other Apple devices), its up to the investor whether or not to plug in.

Micron is expected to report their Q311 results after the market closes on Wednesday, March 30, 2011. The Street is currently looking for EPS of $0.03 on revs of $2.06 billion.

Disclosure: The Author holds no position in any stock mentioned.


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