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Micron Technology Inc MU

Morningstar Rating
$119.25 +0.45 (0.38%)
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Company Report

Micron Earnings: Valuation Up 14% to $80 Behind Strong Recovery and AI, but Shares Still Look Pricey

We raise our fair value estimate for shares of no-moat Micron Technology to $80, from $70, as we raise our short-term forecasts after the firm reported strong February-quarter results and an outlook for the May quarter above our model. We believe Micron has more strength to come in the next two years as it benefits from rebounding prices in both DRAM and NAND memory chips after steep downturns in 2023. We expect Micron to also see upside to the underlying DRAM market rebound as it develops rising penetration in high-bandwidth memory, or HBM, which is an input into graphics processing units, or GPUs, from the likes of Nvidia that run artificial intelligence models. Still, we believe Micron will continue to be prone to memory market cyclicality (as seen in 2023) over the long term, and we forecast more tepid growth after fiscal 2025. We continue to see shares as overvalued and recommend investors seek a better entry point.

Price vs Fair Value

MU is trading at a 46% premium.
Price
$117.13
Fair Value
$64.00
Uncertainty
High
1-Star Price
$544.00
5-Star Price
$27.00
Economic Moat
Zzsn
Capital Allocation
Mpncwmp

Bulls Say, Bears Say

Bulls

When memory markets are in an upswing and demand is strong, Micron’s sales growth and profitability can be impressive.

Bears

Micron has a high fixed cost base that leaves it vulnerable to underutilization charges and major profit compression when memory markets enter a downturn.

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News

Trading Information

Previous Close Price
$118.80
Day Range
$117.08120.11
52-Week Range
$56.01122.46
Bid/Ask
$118.80 / $118.90
Market Cap
$132.05 Bil
Volume/Avg
55,423 / 19.1 Mil

Key Statistics

Price/Earnings (Normalized)
Price/Sales
7.15
Dividend Yield (Trailing)
0.39%
Dividend Yield (Forward)
0.39%
Total Yield
0.39%

Company Profile

Micron is one of the largest semiconductor companies in the world, specializing in memory and storage chips. Its primary revenue stream comes from dynamic random access memory, or DRAM, and it also has minority exposure to not-and or NAND, flash chips. Micron serves a global customer base, selling chips into data centers, mobile phones, consumer electronics, and industrial and automotive applications. The firm is vertically integrated.
Sector
Technology
Industry
Semiconductors
Stock Style Box
Large Value
Total Number of Employees
43,000

Competitors

Valuation

Metric
MU
005930
000660
Price/Earnings (Normalized)
37.67502.64
Price/Book Value
3.011.542.29
Price/Sales
7.151.844.51
Price/Cash Flow
24.519.6142.71
Price/Earnings
MU
005930
000660

Financial Strength

Metric
MU
005930
000660
Quick Ratio
2.131.790.72
Current Ratio
3.742.591.50
Interest Coverage
−8.018.15−10.36
Quick Ratio
MU
005930
000660

Profitability

Metric
MU
005930
000660
Return on Assets (Normalized)
−4.01%4.31%−3.12%
Return on Equity (Normalized)
−5.85%5.57%−5.42%
Return on Invested Capital (Normalized)
−4.47%4.52%−3.37%
Return on Assets
MU
005930
000660
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