MU - Micron: The Meltdown Is Not Over - Still Expensive Here

2024-06-30 11:00:19 ET

Summary

• The market has overreacted to MU's double beat FQ3'24 earnings call and promising FQ4'24 guidance, with the stock losing -16% of its value since the recent peak.
• It is apparent by now that the pulled forward rally over the past few quarters have not been sustainable, with the stock still expensive here.
• Despite the robust generative AI tailwinds for MU's HBM/ SSD segments and the potential record high revenues in 2025, we believe that the stock needs another deep pullback to $110s.
• While the management has recently repaid their debts maturing in 2025, we do not expect another dividend raise soon, especially given the high capex/ cyclical semi investments ahead.
• With MU and NVDA already displaying a head and shoulder pattern since April 2024, it appears that there may be more volatility in the near term as the wider market also pulls back and "locked in their profits" here.

We previously covered Micron Technology (NASDAQ: MU ) in April 2024, discussing why we had maintained our Hold rating, despite the excellent FQ2'24 earnings, promising FQ3'24 guidance, and numerous growth opportunities from the ongoing generative AI boom....

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