Credit Suisse says red-hot chip stock Micron has more room to run

• Credit Suisse reiterates its outperform rating for Micron shares, predicting the chipmaker will report profits above expectations this year.
• The firm's analyst says the company will benefit from rising memory prices and better cost controls.
• Micron is the best-performing chip name in the S&P 500 with a nearly 50 percent gain year-to-date.

A booth of Micron Technology at an industrial fair in Frankfurt, Germany.

Kai Pfaffenbach | Reuters

One Wall Street firm is getting more bullish on Micron shares, even after the stock's stunning performance so far this year.

Credit Suisse raised its price target to $70 from $60 for the chipmaker's shares, representing 16 percent upside to Monday's close.

The firm reiterated its outperform rating for the stock, predicting Micron will report profits above expectations this year.

We expect "F3Q guidance WELL ABOVE Street. Our positive bias to Rev is driven by better memory ASPs [average selling prices], supported by recent contract pricing, and our positive bias to EPS driven by better cost downs, supported by an improving cost structure and better mix," analyst John Pitzer wrote in a note to clients Monday.

The company's stock rose 1.3 percent Tuesday after the report.

Micron is scheduled to report its second-quarter earnings results on Thursday, according to its website. The company's stock is the best-performing chip name in the S&P 500 with a nearly 50 percent gain year-to-date.

"We continue to see more sustainable demand drivers in DataCenter where high utilization rates significantly increase DRAM ROI [return on investment]," he wrote.

The analyst predicts Micron will report 2018 earnings per share of $10.75 versus the $10.36 Wall Street consensus.