Micron Technology Inc. (NASDAQ:MU) is being bailed out by investors today after it issued an outlook for the current quarter of its fiscal year that was below Street expectations.
Micron is expecting to earn an adjusted $1.43 per Share on revenue of $7.9 Billion in Q2.
Comparatively, analysts were at $8.98 billion and $1.91 per share.
Micron’s stock was down about 12 percent at the time of writing. Wedbush Senior Analyst Matt Bryson calls this a great opportunity to purchase a high-quality name at an incredible discount.
Why does Wedbush believe Micron is a good investment?
Matt Bryson said that Micron’s weak outlook was largely due to excess supply and inventory.
Micron’s production cuts, however, will likely improve things in the future. The chipmaker will be reducing its investment in everything but high-bandwidth memory for AI.
Bryson believes that MU’s growth will resume in the second half of the current fiscal year, just like the company said in its press release. He believes that Micron’s stock will continue to rise to $140, which would indicate it is well-positioned for more than 50% return in 2025.
Investors can enjoy a 0.44% dividend with the MU share at this writing while waiting for recovery.
Micron has a huge advantage over its competitors
Bryson agrees that the competition, especially from China, is increasing.
He still recommended stocking up on MU, as Chinese vendors such as CXMT or YMTC only account for a small fraction of the market.
In an interview with CNBC, he said that “They can only really sell to China”.
Wedbush analysts do not consider the Chinese vendor’s competition to be a serious long-term issue, as their customer base is rather limited and they are also significantly less technologically advanced than Micron.
Micron’s shares have fallen by about 40% since their June high for the year.
MU stocks are just trading above a critical support
Matt Bryson, Wedbush’s analyst, was also encouraged by the fact Micron Technology beat Street expectations in its most recent quarter.
Stifel analysts echoed this bullish outlook as they raised the target price on MU from $130 to $130, which indicates a potential upside of about 45%.
Wall Street believes that Micron’s focus on high-bandwidth memory will unlock significant gains in the share price of its company, as it is positioned to gain from Rapid Growth and Artificial Intelligence.
Statista predicted that the AI market would grow by a rate compounded annualised of over 28% in the next five-year period.
Micron’s stock currently trades just below a critical support level of $90.
The post Deep dive: why Micron’s guidance should not concern investors as much may be updated with updates
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