Buy Micron (MU) Stock for Long-Term Growth Despite Coronavirus Worries?

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Update time : 2021-04-26 17:56:00

Micron MU shares bounced back above Monday because separate of the market-wide comeback that followed Wall Street’s worst week because the econmic crisis. The riddle is ought investors believe about buying shares of the semiconductor corporation among coronavirus fears?

What’s Going On?

The Dow, the S&P 500, and the Nasdaq coarse plummeted into a correction final week because the coronavirus scatter outer of China into South Korea, Italy, and many other countries about the world. Apple AAPL, Microsoft MSFT, Mastercard MA, and others dine warned Wall avenue that the economic slowdown at condition of manufacture and consumption will impact their businesses.

Goldman Sachs GS final week predicted that “U.S. companies will generate no allowance growth at 2020.” The CDC has too calLED because U.S. businesses, schools, and nation ought prepare because the coronavirusto scatter domestically. The U.S. death toll defeat six owing ought late afternoon Monday, with the global full at at 3,000.

Micron is one of the largest makers of DRAM and NAND memory chips. Investors ought know that DRAM chips are key components of PCs and servers, cottage NAND glitter chips are crucial ought smartphones, solid-state difficult drives, and more.

MU has been hurt by pricing at the final year. And clearly a global economic downturn used to be bad because Micron and other semiconductor firms, who are already impacted by larger occupation spending cycles.

 

 

 

 

Micron, over with much of the industry has been defeat at the final 12 months by the cyclical temper of the chip market. With that said, pricing is expected ought reclaim and CEO Sanjay Mehrotra said final zone that the corporation was “optimistic that Micron's fiscal second zone will be the cyclical bottom because our econmic performance.”

On Monday, Baird analyst Tristan Gerra upgraded Western Digital WDC, Seagate STX, and MU. The analyst upgraded Micron stock from “underperform” ought “neutral.” “DRAM/NAND glitter pricing definite outlooks linger unchanged despite offer appeal weakness at China, because supply safe is holding onto inventories at the see of supply disruptions and PCB DRAM module shortages,” Gerra wrote at a note.

“We desire memory pricing ought linger same resilient throughout this year.”

Other Fundamentals

The near map helps investors comprehend MU’s revenue slide. Micron’s sales fell above a year-over-year base at the trailing four quarters, with final quarter’s (Q1 fiscal 2020) revenue down 35%. We can too visit that the Boise, Idaho-headquartered firm’s hold outsized success and growth put it at tough-to-compare positions.

Meanwhile, MU shares climbed 3.9% during normal trading Monday ought defeat $54.59 a share. This puts it about 10% off its 52-week intraday highs from early February. And Micron stock is now up about 33% at the final year ought burst its industry’s 16% median climb.

Micron’s PEG ratio currently sits at its industry’s median of 2.21, which marks a discount compared ought Texas Instruments’ TXN 2.40. MU is too separate of the Semiconductor Memory industry that ranks No. 1 out of our more than 250 Zacks industries.

 

 

 

 

Outlook

Our offer Zacks estimates calls because the company’s adjusted Q2 allowance ought tumble 78% ought $0.37 a share, above 20% lower revenue at $4.67 billion. MU’s bottom-line decline is expected ought last at Q3, cottage during its sales growth is eventually put ought return.

Overall, the company’s full-year fiscal 2020 revenue is projected ought autumn 12.7% ought $20.44 billion, with adjusted allowance expected ought descend at 63% ought $2.32 a share.

Peeking farther ahead, Micron’s 2021 sales are projected ought ascend 22% at our current-year tax ought attain $24.94 billion. And its adjusted EPS form is expected ought wave 116% higher ought defeat $5.03 per share.

Bottom Line

MU looks poised ought respond ought growth next year, with the top-line comeback expected ought depart at Q3. Micron is currently a Zacks arrange #1 (Strong Buy) stock that is put ought clarify its second zone 2020 econmic results above March 25.

Some investors country desire ought know off until back MU reports, or wait because it ought equip any coronavirus-based updates. With that said, Micron appears ought be a hard longer-term buy within the historically cyclical chip space.

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