This report is an updated version of the report published on 14^th November at 7:16 AM PST

Micron Technology, Inc.

MU Details

Micron Technology, Inc. (NASDAQ: MU) is an industry leader in providing innovative memory and storage solutions. The company’s portfolio of products includes high-performance DRAM, NAND and NOR memory and storage products. It markets its products through its Micron® and Crucial® brands.

Financial Results for the Q4 FY 2022 and FY 2022

• In Q4 FY 2022, MU has posted revenue of $6.64 Bn as compared to $8.64 Bn for the prior quarter as well as $8.27 Bn for the same period of the last year. In FY 2022, its revenue stood at $30.76 Bn versus $27.71 Bn for the prior year.
• The company’s technology as well as manufacturing leadership in DRAM and NAND, deep customer relationships, diversification of product portfolio and robust balance sheet placed MU in the robust footing to navigate challenges related to near-term supply-demand environment.
• In Q4 FY 2022, its GAAP net income stood at $1.49 Bn, or $1.35 per diluted share. However, in FY 2022, GAAP net income was $8.69 Bn, or $7.75 per diluted share.

Key Updates

• MU would hold its fiscal first quarter earnings conference call on 21^st December 2022.

Outlook

On GAAP basis, in Q1 FY 2023, the company is expecting revenue of $4.25 Bn (± $250 million) and its gross margin is expected to be at 25.0% (± 2.0%)

Key Risks

The highly competitive nature of the company’s industry, volatility in the average selling prices of products, etc. are some of the risks MU is expose to. Notably, the downturn in the worldwide economy as well as geopolitical risks are other risks.

Fundamental Valuation

EV/Sales Multiple Based Relative Valuation

Stock Recommendation

The stock of the company declined by ~12.3% in 6 months. It has made a 52-week low and high of $48.45 and $98.45, respectively.

The stock has been valued using EV/Sales multiple based relative valuation (on an illustrative basis), and the target price so arrived reflects a decline of low double-digit (in % terms). A slight discount has been applied to EV/Sales Multiple (NTM) (Peer Average) considering the risks related to dependency on specific customers as well as concentration of revenue with the select number of customers. Also, volatility in the average selling prices of the products could impact its overall business.

Considering the resistance and target level achievement as well as risks associated, it is prudent to book profits at the current levels.

Hence, a ‘Sell’ rating has been provided on the stock at the closing price of USD62.52 per share, up by 3.73% as of 11^th November 2022.

Technical Overview:

Daily Price Chart

Micron Technology, Inc. (MU) is a part of Kalkine’s Global Big Money Product. 

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for share price chart and stock valuation is based on November 11, 2022, and all other data such as stock price performance as of November 14, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.