Is Micron Stock A Buy As Memory-Chip Market Recovers?

2 months ago 12

Memory-chip shaper Micron Technology (MU) is benefiting from an improving concern climate, which has boosted MU stock. After a pullback from its caller surge, 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 73% of Micron's gross successful its fiscal 3rd 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). On Oct. 19, Intel announced a woody to merchantability its Nand representation spot business to SK Hynix for $9 billion.

MU Stock Fundamental Analysis

On June 30, Micron bushed Wall Street's targets for its fiscal 3rd quarter and guided higher for the existent period. But MU banal fell 5.7% connected the report. Investors fretted astir moderating spot outgo reductions and rising superior expenses.

Micron earned an adjusted $1.88 a stock connected income of $7.42 cardinal successful the 4th ended June 3. Analysts expected net of $1.72 a stock connected income of $7.24 billion. On a year-over-year basis, Micron net jumped 129% portion income accrued 36%.

It was Micron's 5th consecutive 4th of income maturation connected a year-over-year basis, aft 5 down quarters. Micron's net roseate for the 4th consecutive quarter, aft six down quarters.

For the existent quarter, Micron expects to gain an adjusted $2.30 a stock connected income of $8.2 billion. Wall Street is predicting net of $2.18 a stock connected income of $7.88 cardinal successful Micron's fiscal 4th quarter. In the year-earlier period, Micron earned an adjusted $1.08 a stock connected income of $6.06 billion.

The institution expects DRAM and Nand spot supplies to stay choky into 2022, which should let Micron to rise prices.

Micron Touts Next-Generation Memory Chips

On June 1, during a keynote presumption astatine the Computex conference, Chief Executive Sanjay Mehrotra boasted astir Micron's technological advancements. MU banal roseate a fraction connected the news.

Micron unveiled representation and retention innovations crossed its portfolio based connected its industry-leading 176-layer Nand and 1-alpha DRAM technology.

"As artificial quality and 5G scope mainstream deployment, they are creating melodramatic caller imaginable for information successful the post-pandemic world," Mehrotra said. "This translation presents an accidental for accelerating innovation to code lawsuit needs. Today we are debuting caller representation and retention solutions that accelerate innovation, from almighty information halfway servers and faster lawsuit devices to intelligent vehicles astatine the edge."

As 2020 ended, respective Wall Street firms named MU banal arsenic a "top pick" for 2021 successful semiconductor stocks. Those firms included UBS, Evercore ISI, Mizuho and Rosenblatt Securities.

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 58 retired of a imaginable 99, according to the IBD Stock Checkup tool. That means it has outperformed 58% of stocks implicit the past 12 months. The champion maturation stocks typically person RS Ratings of astatine slightest 80.

MU banal has an IBD Composite Rating of 88 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.

However, Micron banal has an IBD Accumulation/Distribution Rating of D-, indicating organization selling of MU stock.

Is MU Stock A Buy Right Now?

Micron banal is not a bargain close now. It needs to signifier a new base in the right marketplace conditions before mounting a caller imaginable bargain point. Check out IBD's Big Picture column for the existent marketplace direction.

MU banal ended the regular league connected July 7 astatine 78.22. In a antagonistic sign, MU banal is trading beneath its 50-day moving mean line.

Micron ranks 2nd retired of 9 stocks successful IBD's Computer-Data Storage manufacture group. The radical ranks No. 76 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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