One guy who likes to short INTc and MU and semis would love to read this.. dedicated to 'His rear majesty'....
Shares of Micron Technology (MU) rose 4 « to 65 7/8 on volume of 6.6
million on reports that 64 Meg spot DRAM prices rose 16% last week to
$7.20. After rebounding from $4 to $6 in late July, spot prices continued
to move higher and analysts believe that spot prices could stay at these
levels or move higher in coming months. Contract prices also rose, as
Micron rose contract price to $5.00 and could move them up to $5.50 to
$6.00. Reports suggest that Micron managed to lower inventories from 7
weeks to around 5 weeks. Also, other manufacturers indicated that they also
managed to work their inventories down. Even though DRAM prices rebounded
strongly, supply appears to be tight, which suggests that prices could go
up even higher. This means that ASPs for Micron could be favorable if
prices stay at these levels for few more weeks. There is a good chance that
analysts may have to revise their earnings estimate up.
In fact Salomon Smith Barney did just that by raising earnings estimate for
Micron from $0.65 to $0.85 for fiscal 1999 and to $4.50 from $3.85 for
fiscal 2000. They expect Micron's ASP to come in around $6.50, above
previous estimate of $6.00. This prompted them to raise Micron's 12-month
price target from $75 to $90. Salomon believes that Micron's earnings could
go up even more, if DRAM prices rise further. In fact, 64 Meg DRAMs have
more room to rise, as they were trading around $10 in February. While
analysts are not predicting such a strong rebound, they feel that prices
would remain generally firm, which might support higher stock price for
Micron. PaineWebber believes that for every $1 increase in ASP for Micron,
earnings could go up by $1. PaineWebber is also bullish on Micron. Recent
rise in the stock was accompanied by good volume and money flow, which is
coming from both retail and institutional side.
trading-ideas.com
Keep an eye on shares of eBay, which might come under selling pressure on
Monday after the company's site was down for several hours on Friday. Back
in June, eBay's site was down for a long period of time, which costs the
company almost $4 million in revenues. eBay might have a similar situation
this time. The problem is, sentiment is extremely negative on the stock and
on top of this such negative news might not bode very well. Shares could
move towards its precious low again.
Keep an eye on shares of AOL, which rose slightly and stayed above its
200-day moving average. This area is very important, as the 200-day moving
average has tremendous technical significance. Shares are extremely
oversold after recent decline. The next day or two would determine if AOL
can stay above its 200-day average. If overall market continues to head
lower, this could make things difficult for AOL to stay above critical
support. |
