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Micron jumps to highest level in more than two years

Micron Technologies saw its shares climb to their highest level in two years after the semiconductor maker reported a strong quarter of sales and profit and signalled that the good times would continue to roll.

The stock was one of the day’s biggest gainers, rising 7.4 per cent to $28.43.

Strong demand and rising prices helped Micron deliver a 58 per cent jump in revenue to $4.65bn in the three months to March 2, in line with what analysts surveyed by Bloomberg had expected.

Net income attributable to Micron shareholders was $894m, or 77 cents per diluted share, versus the net loss of $97m, or 9 cents a share recorded in the prior-year period.

Mark Durcan, chief executive, credited the fiscal second-quarter results to “strong demand and limited industry supply” for its DRAM and NAND memory chips, as well as ongoing cost-cutting efforts.

As a result, the company is predicting a significantly stronger third quarter with revenue forecast to come in at between $5.2bn-$5.6bn and earnings per share to be between $1.43-$1.57.

The upper end of the guidance implies a 93 per cent jump in revenue growth compared with the third quarter of last year, when it booked a loss of 21 cents on revenue of $2.9bn.

The figures blew out current market consensus estimates, which see revenue of $4.79bn and earnings of 94 cents a share for the third quarter.

The bullish forecast from Micron had also lifted shares of other chipmakers on Friday with the wider Philadelphia Semiconductor index up 0.8 per cent for the day.

Micron’s guidance for the May quarter is “one of the biggest guidance beats we have seen in semis since Nvidia’s big beat in its October 2016 quarter”, said Stephen Chin, analyst at UBS.

However, Mr Chin cautioned that the current upcycle might not be sustainable.

“One risk to monitor is our global team’s view of some near term supply risk, assuming Samsung adds 40k wafers per month of DRAM capacity this year. If we see more DRAM capacity than this, we could need to reconsider our estimates,” he said.

At the other end of the scorecard, GameStop plunged 13.6 per cent to $20.70 after the video games retailer issued another disappointing quarter of sales and earnings.

Elsewhere, equity investors appeared to be in sanguine mood on concerns the Trump administration will not be able to push through its healthcare reform after the House’s vote on the bill was cancelled on Friday.

The Dow Jones Industrial Average fell 0.3 per cent to 20,596.72 while the S&P 500 lost 0.1 per at 2,351.7. The Nasdaq gained 0.2 per cent to 5,828.74.

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