Micron: Stock Is Not Overvalued (NASDAQ:MU)

In our prior analysis of Micron Technology, Inc. (NASDAQ:MU) from February, we looked into the advancements in the company’s HBM memory technology, highlighting its potential to expand market share through the development of HBM3e. Additionally, we reaffirmed our expectations for Micron’s revenue

Micron

Q1 FY2024

Q2 FY2024

H1 FY2024

Our FY2024 Forecast Growth %

DRAM Unit Shipment Growth

75%

56%

66.1%

-4.3%

DRAM ASP Growth

-30%

-1%

-16.8%

82.8%

DRAM Revenue ($ bln)

3.4

4.2

7.6

19.3

DRAM Growth %

21.4%

55.6%

38.2%

75.0%

NAND Unit Shipment Growth

15%

4%

9.9%

-9.4%

NAND ASP Growth

-5.4%

73.3%

28.3%

28.7%

NAND Revenue ($ bln)

1.2

1.6

2.8

4.9

NAND Growth %

35.6%

80.8%

41.1%

16.6%

Total Revenue ($ bln)

4.6

5.8

10.4

24.4

Growth %

18%

62%

38.9%

56.9%

Micron Revenue Projection ($ bln) (FY)

2023

2024F

2025F

2026F

DRAM

11.02

19.29

22.52

23.23

Growth %

-50.8%

75.0%

16.8%

3.2%

NAND

4.20

4.90

4.91

4.77

Growth %

-46.2%

16.6%

0.2%

-2.8%

Others

0.36

0.20

0.20

0.20

Growth %

-14.9%

-36.5%

-43.8%

0.0%

Total Revenue

15.54

24.39

27.63

28.20

Total Growth %

-49.48%

56.93%

13.30%

2.08%

Earnings & Margins ($ mln)

Q1 FY2024

Q2 FY2024

H1 FY2024

Our Previous Forecast

Revenue

4,726

5,824

10,550

24,728

Gross Profit

-35

1,079

1,044

460

Earnings Before Interest & Taxes (EBIT)

-1,128

191

-937

-5,725

Net Earnings

-1,234

793

-441

-7,229

Gross Margin

-0.7%

18.5%

9.9%

1.9%

EBIT Margin

-23.9%

3.3%

-8.9%

-23.2%

Net Margin

-26.1%

13.6%

-4.2%

-29.2%

Our Previous Earnings & Margins

2023

2024F

2025F

2026F

Gross Margin

-9.11%

1.43%

32.42%

42.59%

EBIT Margin

-35.13%

-23.59%

15.80%

25.96%

Net Margin

-37.54%

-29.73%

11.46%

21.23%

Micron Operating Expenses % of Revenue

H1 2024

Our 2024 Forecast

Selling General & Admin Expenses

5.1%

5.76%

R&D Expenses

15.9%

19.22%

Other Operating Expense/(Income)

-2.3%

0.03%

Operating Income (EBIT)

-8.9%

-23.59%

Net Income

-4.2%

-29.73%

Micron Cash Flow Projections ($ mln)

2022

2023

2024F

2025F

2026F

2027F

2028F

Operating Cash Flow

15,181

1,559

8,923

14,935

16,112

18,593

21,835

Capital Expenditure

-12,067

-7,676

-6,522

-6,909

-6,772

-7,802

-8,732

Government Grants

-1,228

-1,228

-1,228

-1,228

-1,228

Free Cash Flow Margin (%) (Total Investing Cash Flow With Grant)

11.93%

-30.21%

12.50%

31.10%

35.39%

35.93%

39.12%

Free Cash Flow Margin (%) (Total Investing Cash Flow Without Grant)

7.46%

26.65%

31.04%

32.07%

35.63%

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