Winning the love of the people, and, at the least, the love of investors, is not easy. It requires a certain appeal, glamour, know-how, and, most importantly, financial performance. With so many companies striving for investors’ attention in the semiconductor industry, releasing another top-of-the-notch AI chip, fighting for every piece of the market’s pie, even the most capable companies will find it hard to stand out. Micron (MU) is one such company, with solid memory chips and storage solutions and an impressive list of clientele; Among them are Intel (INTC), Samsung (SMSN), Sony (SONY), Microsoft (MSFT), Apple (AAPL) and many more. With those name-dropping, anyone would have expected much more, and Micron has shown notable growth in 2024, but it wasn’t reflected in the stock’s performance.
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Ahead of the company’s earnings call due on December 18th, we take a quick look at the MU’s standings. If you wish to read more about the company’s prospects, you might want to check out what our writer at Tipranks, Bernard Zambonin, had to say about the stock here.
- Impressive Operational Growth: Micron has delivered outstanding growth in Fiscal 2024, with revenue up 61.5% year-over-year and EBITDA increasing by 304%. This growth is driven by high demand for its advanced memory solutions, particularly in AI. Despite this strong performance, the stock has only risen 19% in 2024, underperforming the broader market.
- Valuation: Micron’s valuation appears attractive, with a forward P/E ratio of 11x and a PEG ratio of 0.20x, indicating the stock is undervalued. The company’s Smart Score of 8, which is equivalent to Outperform and a Strong Buy analyst consensus with a 39.92% upside, suggests bright potential. However, as mentioned above, the stock’s performance has not reflected these positive indicators, highlighting a slight disconnect between market perception and the company’s financial health.
- Investor Concerns Over Capital Expenditures: Investors’ prime concern relates to Micron’s capital expenditures, expected to reach $8.1 billion in Fiscal 2024, 33% of the company’s revenue. Investors worry about Micron’s ability to control costs and grow its technology effectively. That is why the upcoming Q1 earnings report is important for addressing these concerns, especially regarding future spending plans.
Is Micron a Buy, Sell, or Hold?
Wall Street analysts are bullish on MU stock, with a Strong Buy. The average price target is $153.05, implying a 40.17% upside.
Takeaway
Micron Technology has shown impressive operational growth in Fiscal 2024, with significant revenue increases and EBITDA driven by high demand for advanced memory solutions. Despite this, the stock has underperformed, rising only 19% in 2024, and investors remain concerned about high capital expenditures. As stated in the beginning, it’s not an easy task to win the love of the people, but Micron seems to be on the right track to doing just that.
