Micron Technology stock forecast: Forecasting a slow year?
Founded in 1978, Micron Technology (MU) started out as a four-person semiconductor design company based in Idaho, US. It is a global leader in developing memory and storage solutions.
Micron products are used across numerous business segments, including consumer electronics, automobiles, communications with computers. The company employs over 40,000 employees in 17 global locations.
The company is one of the world’s largest manufacturers of DRAM and NAND memory chips. According to Statista, in the first quarter of 2022, Micron was the third largest DRAM supplier with a total market share of 23.8%. Samsung and SK Hynix occupied 43.5% and 27.3% of the total DRAM market share, respectively.
The MU stock price has been adversely affected by the global chip shortage and peaking global inflation rates this year. From a close price of $95.75 on 3 January, Micron Technology stock last closed at $57.81 on 11 July, reflecting a fall of nearly 40%.
Join us as we dig deep into the company financials, gain insights on Micron Technology stock predictions and form a plausible MU stock forecast.
Micron Technology Q3 financial results
On 30 June, Micron Technology released its Q3 financial results for the fiscal year 2022. It reported $8.64bn in revenues, reflecting a double-digit growth of approximately 16% from $7.42bn in Q3. Quarter-over-quarter (QOQ), it was an over 10% growth from $7.79bn.
All of its four reportable business segments: compute & networking, mobile, storage and embedded depicted quarterly revenue growth. Other than the mobile segment, all units also reported yearly increases in sales.
The highest growth came from the storage segment, which reported revenues of $1.34bn. A 15% quarterly increase and 33% yearly.
Micron’s memory and storage business continued to outpace the broader semiconductor industry, which it credited to the end markets of electric vehicles (EVs), artificial intelligence (AI). The company also reported product momentum in attractive growth markets by the virtue of its versatile portfolio.
Smartphone sales expectations have been underwhelming for 2022, citing an industry-wide slowdown. The mobile segment had a year-over-year (YOY) decline of 2% in revenue, from $1.99bn to $1.96bn.
The generally accepted accounting principles (GAAP) net income for Q3 was reported at $2.63bn, an over 50% increase YOY from $1.73bn. Non-GAAP diluted earnings per share (EPS) were $2.59, surpassing FactSet analysts’ expectations of $2.43 a share.
With the Q3 financial results out, the board of directors declared a quarterly dividend of $0.115 a share. This would be payable in cash on 26 July to all the shareholders on record as of the close of business on 11 July.
Technology leaders through DRAM and NAND
Micron saw 15% and 26% revenue growth through its DRAM and NAND sales, with $6.27bn and $2.28bn, respectively. DRAM sales made up 73% of the total revenue, while NAND’s contribution stood at 26%.
By industry standards, Micron’s 1α node is quarters ahead in technology. For Q3 2022, the 1α node ramp represented the company’s largest DRAM node in all of its shipment mix. The company’s newest node, 1ß (1-beta), remained on track to ramp in manufacturing by the end of 2022.
On 28 June, Micron announced shipping of the world’s first 176-layer NAND SATA SSD designed for data centre workloads. The general manager of Data Centre Storage and vice president of Micron, Alvaro Toledo, mentioned that this technology positions Micron to lead the SATA market.
Micron Technologies also anticipated a ramp in production of its 232-layer node by the end of the year.
Micron Technology guidance for FY 2023
In its Q3 financial results, the company admitted to having moderated its expectations relating to demand growth since its Q2 earnings. As a result of the Covid-19 control measures in China, rising global inflation and geopolitical tensions in Europe, consumer demand from the end markets has grown weak.
While automotive, networking and cloud markets show resilience despite a tricky macroeconomic environment, the PC and smartphone inventories are expected to be adjusted through the second half of 2022.
Compared to the mid-single-digit percentage growth anticipated from the smartphone markets earlier in the year, Micron Technologies now projected the smartphone unit volume could decline by the mid-single-digit percentage range YOY.
Commenting on Micron’s future outlook, CEO Sanjay Mehrotra said:
In its Q4 2022 guidance, Micron forecast adjusted earnings of $1.63 a share and sales of $7.2bn. This was significantly lower than analysts’ expectations of $2.60 adjusted earnings on $9.15bn sales in Q4 2022.
The subdued forecasts hit the MU stock price. On 30 June, when the Q3 financial results were posted, Micron Technologies stock was trading at $55.28, the following day it closed $53.65, 3% lower.
Micron Technologies stock forecast and technical analysis
Milan Vaishnav, CMT, MSTA, founder and technical analyst at Chartwizard.ae, shared his technical opinion on the Micron Technology share price forecast:
As of 12 July, Market Beat reported 22 of 27 analysts rated the MU stock a ‘buy’, four suggested ‘hold’ and one recommended ‘sell’. The consensus 12-month Micron Technology stock forecast is $87.42 a share, varying from a low of $50 to a high of $135. The consensus had an upside of 51.21%, based on the last closing price of $57.81.
The Micron Technology stock forecast for 2022 from algorithm forecasting service Wallet Investor estimated the stock to close at $61.495 by December 2022. The long-term predictions were even more optimistic. Its Micron Technology stock forecast for 2025 anticipated the stock could be within the range of $94.155 to $96.521 by December.
On 5 July 2022, Fox Advisors downgraded the Micron Technology stock to equal weight from its previous outperform rating. The same day, Goldman Sachs reduced its target on MU stock forecast to $75 from $86 while maintaining a ‘buy’ rating. Lastly, Raymond James decreased Micron’s stock price target to $72 from $115 but maintained a ‘strong buy’ rating on it.
When looking at Micron Technology stock forecasts, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Analysts’ stock price predictions are based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results. And never invest money that you cannot afford to lose.
FAQs
Is Micron Technology a good stock to buy?
In its Q3 2022 financial results, Micron Technology delivered record revenue numbers. With its industry leading DRAM and NAND technologies, the company is well positioned amongst competitors such as Samsung and SK Hynix. However, citing reasons of supply issues and high inflationary environment, the company anticipates a slow-down in the near term.
Whether these factors make MU stock a good investment for you or not will depend on your portfolio composition, investment goals and risk profile, among other factors. Different trading strategies will suit different investment goals with short or long-term focus. You should do your own research. And never invest money you cannot afford to lose.
Will Micron Technology stock go up or down?
Nobody knows for sure. As of 12 July, forecasting service Wallet Investor predicted the MU stock could close at $61.495 by December 2022. While Market Beat’s 12-month stock price target was $87.42.
However, analysts’ forecasts can be wrong and shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Should I invest in Micron Technology?
Only you can decide if Micron Technology stock is a suitable investment depending on your own investment objectives and risk tolerance. You should conduct your own research and then make a decision regarding Micron Technology stock buy, sell or hold. It’s important to reach your own conclusion on a company’s prospects and the likelihood of achieving analysts’ targets. And never invest money you cannot afford to lose.
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