SSNLF - Micron: Immense Bullish Support Embedded Here - Minimal Margin Of Safety

2024-01-31 09:00:00 ET

Summary

• Mr. Market continues to award MU with premium FWD valuations due to the refreshed PC replacement cycle and potential tailwinds from generative AI.
• The memory industry has also bottomed, as reported by multiple South Korean producers, with stable inventory levels and improved top/bottom lines.
• However, the MU stock is likely to trade sideways as it grows into its pulled-forward upside potential, with the stock's over-optimistic rally offering a minimal margin of safety.
• While its dividend safety may be graded as a B+, anyone looking for rich payouts may have to temper their expectations as well, with its future Dividend Per Share Growth likely to underwhelm until things normalize.
• While MU expects "improved margins and financial performance throughout 2024 and record industry TAM in calendar 2025," we are unlikely to see an NVDA-like jump in MU's top/ bottom lines ahead.

We previously covered Micron Technology (MU) in July 2023, discussing its uncertain near-term prospects as the memory chip correction continued with bloated global inventory.

Combined with its overly aggressive capex plans, impacted profitability, and the stock's overly optimistic rally thus far, we had chosen to rate it as a Hold then....

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