Micron Technology has surprised investors, changing the analyst’s view from sell to neutral. The company’s strong Q2 results are driving growth in revenue and margins. In the second quarter, Micron’s revenue increased 196% year-over-year to $23.9 billion, with gross margins reaching a high of 75%. The company also increased its net cash to $6.6 billion.
However, despite this growth, management warns that the supply of key components like DRAM and NAND may eventually put pressure on margins. Additionally, Micron’s historical cyclicality suggests that it may not be able to sustain high growth rates forever.
Currently, Micron trades at under 4 times earnings for the next fiscal year, which is relatively low compared to its historical prices. However, this also means that there may not be much room for the stock price to rise in the future.
This update suggests that investors should consider a more neutral stance on Micron, as it’s not clear how long the company can maintain its current growth pace.
Source: https://seekingalpha.com/article/4888484-micron-i-was-wrong-this-time-is-indeed-different-rating-upgrade