Micron Higher On Better DRAM Pricing, Strong OmniVision Report

Micron (MU) shares are on the rebound, propelled by positive analyst comments, signs of stability in DRAM pricing and Thursday’s surprisingly strong report from OmniVision (OVTI), a company which competes with Micron in image sensors for camera phones and digital camera.

So, for starters, there are signs that DRAM pricing is stabilizing after a recent swoon. The web site (and capitalization nightmare) DRAMeXchange.com reported Friday that DRAM prices were stable overnight, while NAND flash prices were slightly higher.

Michael Masdea, an analyst at Credit Suisse, Friday morning asserted that the stock has likely bottomed, asserting that there is “potential for a pricing trough,” with improving seasonal demand starting in the August quarter.

Masdea also notes that the strong earnings report and outlook Thursday from OmniVision has positive implications for Micron’s image sensor business. “The commentary on higher unit demand for image sensors and the shift to higher mix cell phones should bode well for MU’s image sensor revenues,” he wrote in a note. He warns, however, that growth in the segment will be limited by the fact that the penetration of cameras in handsets is reaching 80%. Competition in the sensor market “could weigh” on results in the segment as well, he adds.

MU vs. OVTI 1-yr chart: