With 10-year Treasury yields soaring to multi-year highs, it’s not surprising the S&P 500 is, as of May 19, on a three-session skid — one that’s weighing on some previously high-flying growth stocks.
Micron (MU) hasn’t been immune. An 8.85% drop for the week ending May 19 highlighted that. But in the context of an almost 56% rally over the past month and a year-to-date gain of nearly 145%, the stock’s recent pullback is arguably small and healthy. That retrenchment may also prove inviting for traders eyeing the Direxion’s Daily MU Bull 2X Shares (MUU ).
That Direxion ETF is designed to deliver 200% of the daily performance of Micron shares. It may be worth monitoring now, because the sell-side remains constructive on Micron, largely due to accelerating dynamic random access memory (DRAM) and NAND flash memory demand.
Memory Could Make MUU Move Higher
Reflected in analyst sentiment, the memory bottleneck is the cog in the Micron rally. Citing rising DRAM and NAND prices, Citi on Tuesday reiterated a “buy” rating on Micron while boosting its price target to $840. That implies significant upside from the May 19 close of $698.74.
Potentially adding to the allure of MUU for short-term traders, Micron is attracting multiple bullish price target revisions. Mizuho analyst Vijay Rakesh joined that party on Tuesday, lifting his price target on the semiconductor stock to $800 from $740. Rakesh estimates that DRAM and NAND prices rose 355% and 413%, respectively, year-to-date, buoyed by AI demand.
Another factor that could lift Micron and MUU is resolution to labor strife at Samsung Electronics, one of Micron’s direct competitors in the DRAM space.
“Samsung’s workers are demanding the company allocate 15% of its operating profit for bonuses and are threatening a general walkout from May 21 to June 7. Jefferies estimates this halt could impact roughly 3% of global memory-chip market,” reported Barron’s.
If Samsung workers officially strike, thus constraining supply of that companies memory chips, Micron could temporarily command higher prices for its competing semiconductors. That’s a situation MUU traders should monitor in advance of Micron’s next earnings update, which arrives on June 24.
“Samsung management and union leaders are holding last-minute talks to reach a resolution. According to local Korean media, these discussions could last until Wednesday—just a day before the strike is scheduled to begin,” according to Barron’s.
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