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Micron Technology Inc MU Stock Quote

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Morningstar‘s Stock Analysis MU

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Is it the right time to buy or sell?

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We Think Micron’s Weak Q4 Results and Q1 Outlook Cement Cyclical Downturn; Reducing FVE to $70

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

Micron reported fiscal fourth-quarter results that suffered from deteriorating end-market conditions, with revenue falling short of management’s guidance. Although we remain positive on long-term memory demand growth stemming from trends such as artificial intelligence, 5G, electric/autonomous vehicles, and cloud computing, we now expect fiscal 2023 revenue to be down sharply (at least 30%) as the industry grapples with tepid consumer demand and oversupply. We appreciate that Micron is cutting its capital expenditure budget for fiscal 2023 to $8 billion (versus $12 billion in fiscal 2022) and will be lowering its factory utilization to curb output. Based on our lower near-term revenue and margin assumptions, we are lowering our fair value estimate to $70 per share from $90 for no-moat Micron. Although shares trade at a discount to our updated fair value, we think prospective investors should prioritize more moatworthy chip stocks such as AMD and ASML.

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Company Profile MU

Business Description

Micron historically focused on designing and manufacturing DRAM for PCs. The firm then expanded into the NAND flash memory market. It increased its DRAM scale with the purchase of Elpida (completed in mid-2013) and Inotera (completed in December 2016). The firm's DRAM and NAND products tailored to PCs, data centers, smartphones, game consoles, automotives, and other computing devices.

8000 South Federal Way, Post Office Box 6
Boise, ID, 83716-9632
T +1 208 368-4000
Industry Semiconductors
Most Recent Earnings May 31, 2022
Fiscal Year End Sep 2, 2022
Employees 43,000

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