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My coverage on Micron Technology (MU) has been lacking so far in 2020 as the year was and continues to be dominated by Covid-19. In fact, the last update dates back late December as I concluded that a recovery was priced into the shares at $55 at the time.
Shares have fallen by another $10 to $45 due to the impact of Covid-19; yet unlike many semiconductor plays, Micron has not been enjoying the same momentum in its operating business. I like the valuation here, yet am not chasing shares here yet, although I am inclined to buy a further dip.
Over the past decade, Micron has been riding the wave of increased demand for its products for all the obvious reasons and megatrends, which have been underlining the increase in demand. While its business is typically somewhat of a commodity business (certainly in the past) on a
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In a previous article we timidly proposed that the bottom for Micron (MU) was close at hand if not already here. Since then, there have been new developments that reinforce that theory. Incidentally, the stock has shown renewed strength recently and may have even gotten ahead of itself.
The previous article was published at a time when everything was going wrong for Micron’s stock. Shortly before then, Deutsche bank analyst Sidney Ho had downgraded Micron citing inventory buildup in data centers and weakening demand elsewhere. The next day, at a KeyBanc event, Micron’s CFO disclosed that Micron may miss the revenue target at the next earnings report. Huawei ban was announced a short time later and during a subsequent BMO conference it was revealed that the ban could affect Micron’s top-line by almost 10%. If the foregoing trifecta was not enough, there were price target cuts by other analysts as