Memory-chip shaper Micron Technology (MU) is benefiting from an improved concern climate, which has boosted MU stock. But with a caller pullback successful MU stock, immoderate investors mightiness beryllium wondering: Is Micron banal a bargain close now?
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The memory-chip marketplace deed the skids successful the 2nd fractional of 2018 erstwhile income of smartphones, idiosyncratic computers, servers and different cogwheel slowed. But memory-chip income rebounded successful precocious 2020.
Boise, Idaho-based Micron makes 2 main types of representation chips: DRAM and Nand. Dynamic random-access memory, oregon DRAM, accounted for 74% of Micron's gross successful its fiscal 4th quarter. Nand flash representation accounted for 24% of its gross during the period.
DRAM chips enactment arsenic the main representation successful PCs, smartphones and different devices, moving intimately with cardinal processing units. Nand flash provides longer-term information storage.
In DRAM chips, MU banal competes with South Korea's Samsung Electronics and SK Hynix.
In Nand flash chips, Micron competes with Samsung, SK Hynix, Kioxia, Western Digital (WDC) and Intel (INTC). But successful October 2020, Intel announced a woody to merchantability its Nand representation spot business to SK Hynix for $9 billion.
MU Stock Fundamental Analysis
On Sept. 28, Micron bushed Wall Street's targets for its fiscal 4th quarter. But it severely missed views with its guidance for the existent quarter. MU banal fell 2% connected the news.
Micron earned an adjusted $2.42 a stock connected income of $8.27 cardinal successful the 4th ended Sept. 2. Analysts had expected Micron net of $2.33 a stock connected income of $8.23 billion, according to FactSet. On a year-over-year basis, Micron net jumped 124% portion income surged 37%.
It was Micron's sixth consecutive 4th of income maturation connected a year-over-year basis, aft 5 down quarters. Micron's net roseate for the 5th consecutive quarter, aft six down quarters.
For the existent quarter, Micron expects to gain an adjusted $2.10 a stock connected income of $7.65 billion. But Wall Street was modeling Micron net of $2.53 a stock connected income of $8.54 cardinal successful its fiscal archetypal quarter, FactSet said. In the year-earlier period, Micron earned 78 cents a stock connected income of $5.77 billion.
Cyclical Downturn Ahead?
On Aug. 12, Morgan Stanley forecast a cyclical downturn for DRAM representation chips starting successful calendar first-quarter 2022. In a enactment to clients, the concern slope downgraded MU banal to adjacent weight, oregon neutral, from overweight, oregon buy.
Two days earlier, Micron banal tumbled erstwhile a marketplace probe steadfast predicted weakening prices for representation chips successful the 4th quarter. TrendForce said declaration prices for representation chips utilized successful idiosyncratic computers volition diminution by arsenic overmuch arsenic 5% successful the December 4th from the September quarter. It cited precocious inventories of DRAM chips successful the proviso chain.
However, immoderate analysts connected Wall Street pushed back, saying the memory-chip marketplace remains beardown and is much than conscionable PCs.
On Oct. 12, TrendForce predicted that DRAM representation spot prices volition participate a play of downswing successful 2022 arsenic request lags supply. DRAM prices volition statesman to diminution successful the 4th quarter, the steadfast forecast.
Then, connected Oct. 20, TrendForce forecast a cyclical downturn successful Nand flash representation prices successful 2022.
Micron Touts Next-Generation Memory Chips
On a league telephone with analysts Sept. 28, Chief Executive Sanjay Mehrotra boasted astir Micron's technological advancements successful the just-completed fiscal year. The company's representation and retention innovations are based connected its industry-leading 176-layer Nand and 1-alpha DRAM technology.
"For the archetypal clip successful Micron's history, we established exertion enactment concurrently successful some DRAM and Nand," helium said.
Mehrotra added, "The secular request for representation and storage, combined with Micron's focused execution and our rock-solid equilibrium sheet, positions america good to present beardown fiscal show and make important shareholder worth successful fiscal 2022 and beyond."
On Aug. 2, Micron announced that it volition statesman paying a quarterly currency dividend. The archetypal dividend of 10 cents a stock volition beryllium paid to qualifying shareholders connected Oct. 18. MU banal roseate 4.2% connected the news.
Micron Stock Technical Analysis
On Nov. 6, Micron banal broke retired of a cup-with-handle base astatine a buy point of 54.92, according to IBD MarketSmith charts. A three-weeks-tight pattern successful precocious December offered an add-on bargain constituent astatine 74.71.
MU banal deed a astir 21-year precocious of 96.96 connected April 12, earlier the outpouring tech banal sell-off. It reached its all-time precocious of 97.50 successful July 2000 during the dot-com bubble.
Micron banal has an IBD Relative Strength Rating of 55 retired of a imaginable 99, according to IBD Stock Checkup. The Relative Strength standing shows however a stock's terms show stacks up against each different stocks implicit the past 52 weeks. The champion maturation stocks typically person RS Ratings of astatine slightest 80.
MU banal has an IBD Composite Rating of 84 retired of 99. The champion maturation stocks person a Composite Rating of 90 oregon better. IBD's Composite Rating combines 5 abstracted proprietary ratings into 1 easy-to-use rating.
In a affirmative sign, Micron banal has an IBD Accumulation/Distribution Rating of B-, indicating humble organization buying of MU stock.
Is MU Stock A Buy Right Now?
Micron banal is not a bargain close now. However, it has been successful a consolidation pattern for the past 31 weeks with a bargain constituent of 97.06.
MU banal ended the regular league connected Nov. 12 astatine 77.30. In a antagonistic sign, MU banal is trading beneath its 200-day moving mean line.
Micron ranks 5th retired of 10 stocks successful IBD's Computer-Data Storage manufacture group. The radical ranks No. 95 retired of 197 manufacture groups that IBD tracks. Growth banal investors should absorption connected the starring stocks successful the apical 40 manufacture groups.
To find the champion stocks to bargain oregon watch, cheque retired IBD Stock Lists and different IBD content. Investors besides tin find apical prospects connected IBD's Leaderboard, MarketSmith and SwingTrader platforms.
Follow Patrick Seitz connected Twitter astatine @IBD_PSeitz for much stories connected user technology, bundle and semiconductor stocks.
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