I hate when stocks receive analyst upgrades ahead of earnings, but that’s what happened Wednesday. Prior to the Micron Technology earnings report — immediately after today’s close — it received an upgrade to outperform by analysts.
Micron Technology Inc. (Nasdaq: MU) is an American semiconductor company specializing in memory and storage chips. Its products are found in everything from cars to computers to personal electronics.
On Tuesday, it closed at around $83 and it was up 1.3% premarket today to around $84. Prior to the catalyst of Micron Technology’s earnings report, the Bank of Montreal (BMO) upgraded the stock to an outperform rating, elevating its price target from $90 to $110.
The supply shortage that’s expected to stretch into 2022.
BMO analyst Ambrish Srivastava explained the upgrade, saying a constrained environment will be “driven by a combination of supply dynamics, capital expenditure (CapEx) discipline and demand drivers.”
In short, supply is down… demand is up… and that’s good for memory chip prices.
I said it at the beginning… I don’t like an upgrade to outperform ahead of earnings. I don’t like it one bit.
Usually because that makes it a perfect time to sell.
That prime selling point comes from two factors:
So why would you not take profits there?
For example, ahead of the Micron Technology earnings report, it was up about $2 premarket. So let’s say I bought calls two or three days ago.
Then the upgrade happens and the stock goes up. At the same time, with volatility high and earnings right around the corner, I’m going to sell and make a solid gain for myself.
I can then move on with my day… without having to worry about earnings.
So I don’t like that.
But we can’t control what analysts do. We can only trade the market as is. And there’s still a way to profit even after the analyst upgrade…
Check out my short video below to see how to trade the Micron Technology earnings report. And as always, traders, make sure to subscribe to our YouTube channel and hit that bell so you can stay up to date with our latest videos.
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