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Micron Technology, Inc. (MU) Outlook: Mixed Signals Highlighted

StockInvest.us, 2 weeks ago

Micron Technical Analysis

On May 30, 2024, Micron Technology, Inc. (MU) closed at $126.29, a decline of 4.02% from the previous day's close. The intraday low was $125.70, and the high reached $131.67. MU is nearing its resistance level of $127.51, with support set at $118.80. It has a 50-day moving average of $119.75 and a 200-day moving average significantly lower at $88.18, indicating strong upward momentum in the medium term. The three-month MACD stands at 5.91, suggesting a positive trend, although the RSI14 at 63 indicates approaching overbought conditions. The Average True Range (ATR) is 3.42, showing moderate volatility.

Fundamental Analysis

MU's current EPS is -3.44 with a PE ratio of -35.44, reflecting negative earnings. Despite this, the company has a robust market cap of $135.02 billion. Notably, the average trading volume is 22.60 million, significantly higher than the recent volume of 12.95 million, indicating reduced trader interest or participation on the latest date. An earnings announcement is scheduled for June 26, 2024, which could act as a critical catalyst for the stock's movement. Analyst sentiment shows strong optimism with 26 'Buy' ratings and a consensus 'Buy' status, despite the DCF indicating an intrinsic value of -6.50, far below the current stock price. Price targets span from $55 to $225, with a consensus target of $113.07, suggesting that current market expectations might be higher.

Short-Term Predictions

Micron For the next trading day, MU is expected to encounter the immediate resistance level of $127.51. If it breaches this level, it might test the recent high of $131.67. Given the RSI indicates nearing overbought territory, a retracement to around $121.86 (stop-loss level) or even lower to its support of $118.80 could occur. For the upcoming week, volatility could remain elevated around the earnings announcement on June 26, possibly leading to significant price swings.

Intrinsic Value and Long-Term Potential

The discounted cash flow analysis suggests a negative intrinsic value, raising concerns about the stock's long-term profitability. However, the semiconductor industry is highly cyclical, and Micron holds a strategic position within it, particularly in DRAM and NAND memory markets. Market sentiment and recent upgrades could suggest future performance improvements, but the intrinsic valuation remains a significant red flag.

Overall Evaluation

In conclusion, MU demonstrates robust technical momentum in the medium term, but fundamental analysis presents a mixed outlook with negative earnings and a troubling DCF valuation. Given the high price targets and strong analyst buy ratings, coupled with cautious short-term technical patterns, MU should be evaluated as a 'Hold' candidate until further clarity is obtained post-earnings announcement. This assessment balances the optimistic market sentiment against the fundamental concerns raised by a negative intrinsic value.

Check full Micron forecast and analysis here.