Micron Price Targets Are Rising - Bull Put Credit Spreads in MU Are Attractive for Investors with Limited Funds

Analysts keep hiking their revenue forecasts for Micron Technology, Inc. (MU) , as well as their price targets (PTs). I previously discussed shorting out-of-the-money puts, which has been successful.

However, as this requires a lot of capital, for investors with limited capital to invest in MU, say $10,000, one attractive play is out-of-the-money bull credit spreads. This article will describe how to play MU as it rises this way.

MU closed at $1,106.59 on Friday, Sept. 4, up 6.10%. The chart below from Barchart shows that it may be breaking out of a recent slump. However, it's still below the June 25 peak of $1,211.

I discussed its higher price targets (PTs) in my last 2 Barchart articles: " Micron Technology Puts Have High Yields for Short Sellers Even With MU Stock Higher" (Aug. 21), and " Analysts Keep Hiking Micron's Revenue and Price Forecasts - Shorting MU Puts Works Here " (Aug. 14).

I showed that MU stock could be worth $1,909.16 (PT) using analysts' revenue forecasts ($239.84b for FY Aug. 2027), a 45% adj. FCF margin, and a 5.0% FCF yield metric. Yahoo! Finance had a $1,501.98 PT.

(Last quarter it made a 44.1% adj. FCF margin, as I showed in my June 26 Barchart article after the company's June 24 FY Q3 release for the quarter ending May 28).

Since then, analysts have hiked their revenue forecast to $241.08 billion. So, using the same model, MU stock could be worth 89% more, or $1,921.35 per share (PT). Here's why:

$241.08b x 0.45 FCF margin = $108.5 billion adj. FCF

$108.5b / 0.05 FCF yield metric = $2,170 billion ($2.17 trillion) fair market value (FMV)

$2.17 tr FMV / $1.148 trillion mkt cap (Yahoo! Finance) = 1.89, i.e., 89% upside

Similarly, Yahoo! Finance has raised its analyst survey PT average to $1,513.11 from $1,501.98. Similarly, Barchart's PT is now $1,474.42 .

The bottom line is that MU stock is worth between 45% and 89% more, based on analysts' and my price targets.

This makes it ideal for short put strategies, as I described in my last Barchart article on Aug. 21. I suggested shorting the $900.00 and $880.00 put strike price contracts for $46.90 and $40.00 , respectively, for the period ending Sept. 25.