Micron Q1: Riddled With A Challenging Outlook (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• In my fiscal Q1 FY25 preview note on Micron Technology, Inc., I had expressed a cautious stance, which correctly anticipated a weak NAND market ahead (NAND makes up 26% of Micron's revenues).
• The NAND demand cycle seems to be at a local peak as it faces volume and pricing headwinds due to slower growth and inventory corrections at the customers' level.
• NAND weakness has impacted fiscal Q2 FY25 revenue and gross margin guidance and caused it to miss expectations, and the outlook is expected to remain weak for at least a couple more quarters.
• I expect a valuation multiple de-rating to follow almost unanimous downgrades in EPS, revenue and gross margins over the next 4 quarters. Technicals vs. the S&P 500 are also bearish.
• HBM demand is expected to grow handsomely at a 36% CAGR until 2030. As a market leader, Micron is a key beneficiary of this industry trend. This is a key upside risk monitorable for my bearish view.

Read the full article here.