The stock of Micron has plummeted in recent days as investors react to Oracle’s and Broadcom’s earnings. The stock price dropped sharply to $240 from the high for this year of $264.46. The stock is still up 152% since the beginning of this year.
Micron announces first-quarter earnings
The stock price of Micron has seen a significant increase this year. This is due to its revenue growth, which coincides with the boom that the AI industry continues to experience.
As the data centers have grown, so has demand for Dynamic Random-Access Memory (DRAM), flash NAND memory and solid-state products.
The company has been forced to make some significant changes by this demand. The management announced in a statement that they would be exiting their consumer businesses to concentrate on data centers.
This led to allegations that the company abandoned gamers and loyal customers. It also put the company at risk of a potential slowdown, if AI starts to wane.
The financial performance of the Upcountry will give us more information on the growth trend.
Micron has seen its business grow from $7.75 Billion in the fourth quarter of last year, to $11.32 Billion.
The revenue for the year was $37 billion, a significant increase from the $25.1 billion of the prior year. It was one of the fastest growing companies in the technology industry.
The DRAM division, which generated $9 billion in revenue, grew by 27% quarter-on-quarter. The NAND division also made $2.3billion, an increase of about 20% over the same time last year.
Estimates and valuations by analysts
Analysts believe that growth in the first three months of this year will be faster. Analysts estimate that revenue for the company increased by an average of 47% to $12.8 Billion in the past quarter. The company’s expected earnings per share will be $3.91 compared to $1.79 in the previous year.
Micron’s business has an impressive history of exceeding analyst expectations, so it is likely to report better results than anticipated.
Analysts expect the company’s second quarter revenue to be around $14 billion. This is up 74% compared with last year. The EPS for the second quarter will be $4.4 – a dramatic increase from $1.56 in the previous period.
The results are expected to be released a week following the plunge in Oracle and Broadcom’s stock prices despite their financial reports. Oracle’s stock plummeted amid worries about the company’s debt and cash flow. OpenAI could opt to reduce its infrastructure building.
Micron’s stock is undervalued. Its forward price to earnings ratio, at 13.25, is much lower than that of the industry median (24). The average five-year PE is 75.
Micron has a forward multiple of EV/EBITDA that is 7,35. This is much lower than industry median, which stands at 15,27. The company also has a rule-of-40 multiplier of 61. The estimate of this company is obtained by adding the revenue growth rate of 40 percent and net profit margin of 21 percent.
Technical analysis of Micron Stock Price
On the daily chart, the MU price broke a new record of $264.40 in the last week. The bull market was accelerating. The stock price suffered a sharp reversal following the Broadcom earnings and Oracle earnings.
Stocks have formed a double top pattern with a neckline of $192.73. This is the lowest price since November 21, 2011.
The MACD, and Relative strength Index (RSI), have both pulled back their highest levels of this year. This has formed a pattern that is bearish.
The stock is therefore likely to have a significant bearish breakout and could potentially reach the important support level of $200. A move above the high for the year to date of $264.40 would invalidate a bearish forecast.
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