Finance

1 Incredible Growth Stock to Buy Before Its Market Cap Jumps 67%


share price Micron Technology (NASDAQ:MU) After the company released second-quarter fiscal 2024 results (the three months ended February 29) on March 20, the stock price soared. The stock gained more than 14% in a single day thanks to excellent revenue and earnings growth.Micron Technology’s metrics beat Wall Street expectations, its Guidance is strong enough Confirmation that the company’s turnaround has finally arrived.

Over the past year, Micron Technology’s stock has risen 93%. Management’s forecasts for future revenue growth (see below) suggest the stock may have more upside left. Let’s take a look at the numbers to see why investors should consider buying this chipmaker before its next set of incremental revenue forecasts hits its target date.

Micron has stepped up efforts

In the most recent quarter, revenue increased 58% year over year to $5.82 billion. This far exceeded the consensus estimate of $5.35 billion. Even better, Micron swung back from a loss of $1.91 per share in 2019 to an adjusted profit of $0.42 per share. Analysts expected a loss of $0.25 per share last quarter.

A healthy supply-demand balance in the memory chip market meant prices rose last quarter, allowing Micron to significantly improve profit margins. Management said prices for dynamic random access memory (DRAM) soared into the teens last quarter, while prices for NAND flash memory chips rose 30%.

All of which explains why the company’s adjusted gross margin rose to 20% last quarter from negative 31.4% a year ago, while operating margin of 3.5% was a huge improvement from negative 56% a year ago. During the previous year.

Chief Executive Sanjay Mehrotra cited growing memory demand for artificial intelligence (AI) servers as a key reason for its turnaround. He said on the latest earnings call:

Improving market conditions are the result of a combination of factors, including strong [artificial intelligence (AI)] Server demand, a healthier demand environment in most end markets, and reduced supply across the industry, AI server demand is driving HBM’s rapid growth [high-bandwidth memory]DDR5 [D5] and data center SSDs, which are tightening leading supply availability for DRAM and NAND.

Mehrotra expects memory prices to move higher over time and predicts Micron will “deliver record revenue and significantly improved profitability in fiscal 2025.” The company’s prospects for the quarter have proven to be well beyond the analysis. teacher’s expectations.

Micron expects fiscal 2024 third-quarter revenue of $6.6 billion and adjusted earnings per share of $0.45, at the midpoint of its guidance range. Wall Street expected revenue of $6 billion and earnings per share of just $0.09. Year-over-year, revenue growth is expected to be up 76%, which is a big improvement over the company’s growth last quarter.

Micron lost $1.19 per share in the same period last year, which means a recovery in memory prices will give a big boost to its profits, which explains why analysts raised their profit growth forecasts after Micron reported its results. Latest reports.

MU EPS Estimate Chart for the Current Fiscal Year

MU EPS Estimate Chart for the Current Fiscal Year

Buying stocks is a natural move

Micron Technology stock trades at 6.4 times sales, lower than the U.S. technology industry’s price-to-sales ratio of 7.3. According to consensus estimates, Micron Technology’s revenue could reach $24.6 billion this fiscal year. This would represent a 58% jump from the previous fiscal year and is expected to maintain an impressive growth rate next year.

MU current fiscal year revenue forecast chartMU current fiscal year revenue forecast chart

MU current fiscal year revenue forecast chart

Assuming Micron does hit $34 billion in revenue in fiscal 2025 and maintains current levels price to sales ratio, its market value could jump to $217 billion. That would be a 67% jump from current levels. As a result, Micron stock is a bargain for investors right now, so it would be a good idea to buy it before it surges further following its latest earnings report.

Should you invest $1,000 in Micron Technology right now?

Before buying Micron Technology stock, consider the following factors:

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harsh johan Has no position in any of the stocks mentioned. The Motley Fool has no position in any stocks mentioned. Motley Fool has disclosure policy.

1 Incredible Growth Stock to Buy Before Its Market Cap Jumps 67% Originally published by The Motley Fool



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