Once Samsung (SSNLF) entered the market and began growing share on the strength on its ascendant smartphones, Micron's margins and pricing power immediately got squeezed.
With nowhere to turn, management saw consolidation and acquisitions as means of survival. One of these bets was on bankrupt Elipida, which, when you think about it, was an easy bet to place, given that Apple (AAPL) was already using roughly 80% of Elipida's memory capacity. With that in mind, investors spent all of 2013 buying into the promise. Now management must deliver the goods.
To the extent that Micron can beat these estimates while also demonstrating improved cash flow and margin expansion, the Street will reward the stock with a higher multiple. This is even though Micron has already outperformed virtually every other name within the group, including Qualcomm (QCOM) and Broadcom (BRCM).
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I have to believe that all of the "easy money" on this stock has already been made. With 240% gains on the table, the Street will be pleased if Micron merely meets expectations and demonstrates improving margins and stronger pricing power.
For now, investors should be encouraged by a management team that seems committed to doing everything in its power to return value to shareholders. Assuming that Micron beats estimates, investors should expect these shares to reach $25 to $28 by the second half of 2014.
At the time of publication, the author was long AAPL.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.