Micron attractive long term, dangerous short term.

Semi-Conductor stocks have been on a massive run but one has fallen against the trend. Here is the breakdown on $MU otherwise known as Micron Technology.


Current Price: $44.62

52/Wk High: $61.19

52/Wk Low: $31.13


Read below for the breakdown!


Micron is a well known and long time semiconductor giant but as of late the stock has been continually flat or falling. Currently, Micron operates in several segments.


$MU is mainly focused on memory technology which includes DRAM, NAND, and NOR Flash. Not only that but the stock can be further broken down through a price analysis of $MU.


According to TREFIS 60.7% of the current stock price is based on Core RAM, 36.0% based on NAND Flash, and finally, 3.3% of the stock price is based on Cash.


Furthermore, the stock is not going down for no reason and there are some major worries about the companies financial outlook in reference to demand.


For instance, Micron management recently noted that the recent ban on Huawei sales could possibly affect 10% or more of the companies revenue.


Not only that, but the company is in general seeing lower demand according to Barrons. In general, a common trend caused by COVID-19 is hurting the company.


Customers of $MU overstocked memory devices throughout COVID-19 due to supply fears and given that issues really did not arise there is a significant oversupply within the market, therefore, hurting Micron demand.


Moving into earnings $MU delivered a Q3 beat. Micron delivered a $0.82 EPS versus the expected consensus EPS of $0.78. Not only that but revenue also came in strong at $5.4 billion for Q3.


When further analyzing the fundamentals Micron, unfortunately, has $5.851 billion of debt on the balance sheet as of 8/29/19.


On a positive note, the company has built up a sizeable cash on hand position of $8.658 billion as of May 31.


Not only were earnings great but guidance for Q4 was as well. Management was bullish on the Q4 outlook and introduced solid guidance.


$MU management expects revenues for Q4 2020 of $5.75 billion to $6.25 billion and an EPS in a range of $0.95 to $1.15.


While the forecast was great demand is still a worry for management and recently CFO Dave Zinsner said “Suffice it to say, it’s probably somewhat weaker than that range,” (bloomberg.com) in reference to demand.


While demand is a worry in the short term, analysts are very bullish on the largest US manufacturer of computer memory chips.


Currently, the average price target is $63.00/share representing a 41.39% upside. Not only that but the high price target is $100.00/share and the low is $35.00/share.


While analysts seem to be very bullish on Micron stock the big money is as well. Currently, 81.01% of $MU is owned by institutions. Top holders include BlackRock Institutional Trust, Capital International Investors, and Fidelity Management & Research.


Finally digging into the technicals the stock seems to be flashing an opportunity to get in on the stock if you are a long term investor.


Currently, the 6-month RSI sits at a low 39.58 which is a very respectable buying location simply based on RSI.


Not only that but the 6-month MACD sits at a low -1.42 and seems to be in the beginnings of upward momentum.


Finally, the 6-month CCI is -64.92 and the stock sits far off its 52/Wk high of $61.19/share.


In short, based on the technicals it seems Micron stock is at a respectable investment location.


Overall I like the stock long term and believe over the next several years demand will come back, but the short term outlook is mixed and this is not a quick gain play.


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Disclaimer: This is not direct financial advice, simply opinion based on independent research.