Micron Technology Issues Weak Guidance, Prompting Concerns Over ‘Substantial’ Correction

July 8, 2022

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Micron Technology ($NASDAQ:MU) recently reported a challenging quarter and issued weak guidance that prompted analysts to worry over a “substantial” correction, but investment firm Morgan Stanley noted the stock reacted better than expected, which could indicated some enthusiasm as the company works through its issues. A team of analysts, led by Joseph Moore, noted that Micron’s book value is now $44, but could climb to $50, which would limit the downside in the stock. However, the analysts noted that they would not be buyers of the stock, given it’s likely to be a “challenging” period, resulting in excess inventory. “…

While the stock is inexpensive on book value, it is much more expensive than equipment names on price/free cash flow, and much more expensive than Western Digital’s implied memory business on the replacement value of the fabs,” the analysts wrote, adding that Micron will have to work through inflationary pressure, weaker consumer spending and risk appetite, as well as higher capital spending. In addition, the analysts don’t think the NAND business has the “same dynamics” next year as inventory builds are lower, but it’s likely that the second-half of this year is harder than previously believed. Do you think this will affect MICRON TECHNOLOGY market and earnings in the long term? The challenges that Micron Technology is currently facing are significant, and it remains to be seen how well the company will be able to weather them. While the stock may be inexpensive on book value, there are other factors working against Micron that could pressure earnings andresult in a substantial correction.

Market Reaction

Until now, media coverage of Micron Technology has been mostly negative. However, on Thursday the stock opened at $59.1 and closed at $58.8, up by 2.6% from the previous closing price of 57.4. This suggests that investors are bullish on the company’s prospects despite the negative media coverage.

VI Analysis

Company’s fundamentals reflect its long term potential, and the VI app makes it easy to see this potential. The VI Star Chart shows that MICRON TECHNOLOGY is strong in terms of assets, and medium in terms of profitability, growth, and dividend. MICRON TECHNOLOGY has a high health score of 8/10 considering its cashflows and debt, which means it is capable of sustaining future operations even during times of crisis. MICRON TECHNOLOGY is classified as a ‘rhino’, a type of company that has achieved moderate revenue or earnings growth. At the right price, it is a suitable investment for those who are looking for moderate capital gains. Due to its moderate growth rate, such a company is deemed less risky and volatile as it pursues a sustainable growth rate.



Micron Technology is a leading provider of semiconductor solutions. The company’s products are used in a variety of applications including computing, networking, and mobile devices. Micron’s stock price has been on a tear in recent years, but the company issued weak guidance for its fiscal first quarter, prompting concerns that a “substantial” correction may be in store for the stock. Micron’s stock price was up 2.6% following the news, but analysts are divided on the company’s prospects going forward. Some believe that Micron’s strong product portfolio will help it weather the current downturn, while others believe that the company is facing headwinds that could pressure margins and lead to further declines in the stock price.

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