Micron Technology, Inc. (NASDAQ:MU) preannounced fiscal first quarter results for 2017 that hit ahead of the high end of its original guidance range on back of robust DRAM average selling prices (ASPs). At a competitor’s conference yesterday morning, the chip giant boosted its guidance. In reaction, Nomura analyst Romit Shah reiterates a Buy rating on shares of MU while upping the price target from $23 to $25, which represents a nearly 29% increase from where the stock is currently trading.

Now ahead of the fiscal first quarter, MU is calling for revenues to reach $3.975 billion and GM to bring in 25.5% at the midpoint, which is a surge from prior guidance of $3.55 billion to $3.85 billion in revenue and a GM range of 23.0% to 25.5%. Carried by a rise in revenues and margins, the giant now projects EPS to be $0.28, which the analyst notes is “well above” the prior range of $0.13 to $0.21. Therefore, Shah also lifts his revenue projection from $3.75 billion to $3.98 billion and EPS estimate from $0.19 to $0.28.

The analyst notes, “We remain positive on the shares, as we expect mid-teens operating margins and a manufacturing partnership with China to drive the multiple to 2x book, or $25 per share, in the first half of 2017.”

Moreover, Shah sings the praises of the chip giant’s DRAM strength, asserting, “Stronger DRAM fundamentals the main driver behind the upside. Management attributed the higher revenues mainly to DRAM ASP improvements throughout the quarter, coupled with supply constraints. DRAM bit demand remains strong, and little incremental wafer capacity is expected to come online over the next year. In fact, the CFO noted that there were indications of allocations occurring across the industry. Micron expects these trends to continue into F2Q17, even though this quarter is, on average, seasonally weaker.”

Ultimately, “We continue to believe that investors should own MU today for the ongoing recovery in DRAM,” Shah surmises.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Romit Shah is ranked #153 out of 4,241 analysts. Shah has a 65% success rate and realizes 11.4% in his yearly returns. When suggesting MU, Shah yields 12.8% in average profits on the stock.

TipRanks analytics demonstrate MU as a Buy. Out of 18 analysts polled by TipRanks in the last 3 months, 14 are bullish on Micron stock, 2 remain sidelined, and 2 are bearish on the stock. With a return potential of nearly 6%, the stock’s consensus target price stands at $20.50.