Should Buy Micron Stock Despite Weak Guidance?

  • Micron issued weak guidance for Q2 after reporting a disappointing first quarter.
  • Matt Bryson of Wedbush Securities shares his thoughts on MU stock.
  • The chipmaker has seen its shares lose approximately 50% in 2022.

Micron Technology shares (NASDAQ: MU) traded lower in extended hours following disappointing results from the chipmaker in its financial Q1. The ugly results emerged due to elevated customer inventories and lower demand.

Micron’s Second Quarter Guidance

Meanwhile, investors are contemplating the firm’s future guidance as it came well beneath the Street predictions. Meanwhile, Micron forecasts a more than 50% revenue dip in the present quarter. That would mean exploring the $3.8B mark (take or give $200 million). Meanwhile, economists had estimated $3.92 billion.

Its prediction for a 72 – 52 cents per-share loss was also worse than the expert prediction of 32 cents. Sanjay Mehrotra, the CEO, said inventories would enhance in the coming year. However, he confirmed that profitability will stay challenged in 2023.

Time to Buy MU Stock?

Meanwhile, Micron announced strategies of initiating a 10% decrease in its headcount. Also, it’s bailing on bonuses, productivity programs, and stock repurchases for 2023. The restructuring mentioned will lead to additional costs of $30 million in Q2. The memory-chip specialist has its shared trading 50% lower from early on the year.

Though the gloom and doom, Matt Bryson of Wedbush Securities stated that MU stock is a but at its current levels. He added that things are improving, and Micron is where it should be. His outperformance rating has a $65 price target, suggesting an approximately 30% increase from current prices.

Micron to Reduce Spending

Micron expects to decrease expenditures at $7B – $7.5B in the coming year, following an over 50% cut on wafer fab equipment spending. The officials added that wafer fabrication expenditures will lower further in financial 2024. In October, the company unveiled plans to use $100B to build the largest United States chip factory.

Meanwhile, Micron shares are now exploring price levels last witnessed in 2020 second half. As a result, Bryson trusts Micron is a much better firm than it was about six years ago. Also, the Nasdaq-listed company predicts massive profitability after overcoming its prevailing downturn.

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