Micron shares fall due to news of Samsung-Apple deal. Sell ​​shares of OJSC "Research Institute of Molecular Electronics and Mikron Plant" at the best prices! Stock quotes mu

Micron Technology (MU) is an American corporation known for its semiconductor products, the main part of which are DRAM and NAND memory chips.

MU shares are traded on NASDAQ and the St. Petersburg Stock Exchange, which means they are available for purchases on IIS.

Financial indicators

At the end of the second financial quarter (I calendar), the company reported a net profit of $3.31 billion compared to $894 million for the same period last year. Over the past 12 months. earnings per share (eps) growth was 1380%.

Dynamics of annual profit over 10 years

Revenue soared by 58% and amounted to $7.35 billion. The average annual growth rate over the past 5 years is 19.8%. At the same time, growth over the past 12 months. accounted for 75.5%.

Dynamics of annual revenue over 10 years

Gross margin ((revenue - cost) / revenue, profitability indicator) increased by 3 percentage points and amounted to 58.1%, that is, the business became more efficient.

Free cash flow (FCF, operating flow minus capex) amounted to $3.77 billion, having moved into a consistently positive form since mid-2017.

Dynamics of quarterly FCF since 2013

In 2017, the cycle in the market for DRAM and NAND chips entered a growing stage, and prices for these semiconductors soared. Micron's strong second-quarter results were driven by strong demand for chips, including a shift toward higher-value solutions in the cloud, mobile and auto segments.

The company is one of the three leaders in the DRAM market with a 23% share. Micron's main competitors in this segment are Samsung (45%) and SK Hynix (28%).

Comparative assessment

In terms of EV/EBITDA and P/E, Micron is trading below the median values ​​for the group of comparable companies: 4.6 versus 10.1 and 7.1 versus 15.6, respectively.

Forward multiples (taking into account earnings expectations) confirm a similar picture.

At the same time, return on equity (ROE, net profit/equity) significantly exceeds the median for the group of peers with a moderate debt load.

According to the Reuters forecast, for the next five years we can talk about a 36% increase in earnings per share on average per year, with an average of 11% for the peer group. So the financial indicators indicate that the undervaluation by multiples is undeserved.

The PEG (P/E adjusted for earnings growth expectations) is 0.15. All other things being equal, a value below 1 is a factor in favor of buying shares.

Key catalysts

The median analyst target for MU for 12 months is $75 with the current quote being about $60 (beginning of trading on Friday, 06/08/2018). The following factors support the growth of securities:

For the second quarter, DRAMeXchange analysts predict an increase in demand for DRAM chips for Chinese servers by 20%. The server segment accounts for about 30% of Micron's DRAM revenue.

For the whole of 2018, research organization IC Insights forecasts the DRAM market to grow by 37% and the NAND market to grow by 17%. I would like to note the increasing demand for solutions in the field of self-driving cars and artificial intelligence.

Micron is developing new technologies - 3D NAND, NOR Technologies and 3D Xpoint Memory.

. $7.8 billion in cash and equivalents in the company's accounts allows it to pursue a friendly policy towards shareholders. Micron does not pay dividends, but implements share repurchase programs. In the spring, the company announced a $10 billion buyback.

Risks

Possibility of oversaturation of the semiconductor market, which could lead to a cyclical reversal in the industry;

Difficulties of doing business in China. On May 31, Chinese regulators visited Micron's offices. The situation is worsened by the risk of trade wars;

A new round of correction in the US market. MU stock trades at a beta of 1.75, meaning it rises or falls more than the broader market.

Conclusion

Strong financial performance and undervaluation by comparative multiples favor further growth of Micron Technology shares.

In the medium term, I expect the securities to grow to the area of ​​$66, where the 50% Fibonacci projection level of the May growth wave passes. In the event of a stock drawdown, strong support will be located around $54.

Micron Technology chart for the year, daily timeframe

Oksana Kholodenko,
expert on international markets BCS Broker

Micron Technology, Inc. disclosed financial statements for 9 months. 2018 (the company's financial year ends at the end of August).

The company's total revenue jumped by more than half, amounting to $21.9 billion. This dynamics was achieved due to continued high demand for the company's key products.

Half of the company's revenue came from the Memory for Computers and Networks segment, whose revenue grew by almost 90% and operating profit more than tripled against the backdrop of continued growth in sales and average selling prices. As a result, operating margin jumped to 63.0% as unit production costs fell.

The memory segment for mobile devices showed more modest revenue dynamics (+44.4%), which cannot be said about operating profit, which jumped 3.6 times ($2.0 billion). Operating margin increased by 26.5 percentage points to 43.9% due to higher product prices, lower production costs and higher sales volumes.

Revenues from the Data Storage Devices for Companies and Individuals segment grew by 17.5%, and operating profit by 2.6 times to $807 million. This result was largely due to strong demand in the cloud solutions market. Operating margin increased by 26.5 percentage points to 43.9% due to lower production costs and an improved product mix.

The embedded memory segment also showed significant growth in financial performance: operating profit amounted to $1.1 billion, an increase of almost three-quarters, and operating margin increased by 9.1 percentage points. up to 42.7%. Strong growth from the consumer and automotive markets resulted in higher average selling prices and higher sales volumes, partially offset by increased research and development costs.

The company's net financial expenses increased by a third to $656 million. Against the backdrop of virtually unchanged tax deductions, the company's net profit more than tripled, amounting to $9.8 billion.

Overall, the reporting came out better than our expectations; Based on its results, we increased our forecasts for the current financial year in terms of revenue and operating profitability.

The company itself gave a forecast for the final quarter of the financial year in terms of revenue ($8-8.4 billion), as well as net profit per share ($3.3). At the same time, the company's Board of Directors announced the launch of a share repurchase program starting in the 2019 financial year. It is expected that over $10 billion may be allocated for these purposes. Let us recall that in recent years the company has not distributed earnings among shareholders, preferring to invest it in the development of new products.

We expect the company's net income to be in the range of $9 billion to $12 billion over the next few years. Micron shares trade at a 2018 P/BV of just above 2.0 and is among our top picks in the Technology industry.

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