Idaho-based Micron (MU) is a global semiconductor company that provides memory and storage solutions. It serves the personal computer, smartphone, automotive, and data center markets.
Micron’s earnings report shows revenue rose to $7.69 billion in Fiscal Q1, 2022, ended December 2, from $5.77 billion in the same quarter a year ago and surpassed the consensus estimate of $6.67 billion. The company posted adjusted EPS of $2.16 compared to $0.78 in the same quarter a year ago and beat the consensus estimate of $2.11.
For Q2, Micron anticipates revenue of $7.5 billion, give or take $200 million. It expects adjusted EPS of $1.95, give or take $0.10.
Micron ended Q1 with $4.46 billion in net cash. It plans to distribute a quarterly cash dividend of $0.10 per share on January 18.
With this in mind, we used TipRanks to take a look at the risk factors for Micron.
Risk Factors
According to the new TipRanks Risk Factors tool, Micron’s main risk categories are Finance and Corporate and Legal and Regulatory, each representing 24% of the total 38 risks identified for the stock. Tech and Innovation and Production are the next two major risk categories at 16% and 13% of the total risks, respectively.
Micron informs investors that it faces technological barriers to meeting long-term customer demands. It mentions that competitors are developing new memory and storage solutions that may make existing technologies obsolete. While Micron continues to invest in research and development to deliver advanced products, the company cautions that those efforts may be unsuccessful and that it may be unable to recover the investments.
The company tells investors that its systems and products may be targeted by hackers, including state-sponsored actors. It warns that a breach of its systems or products could result in significant losses, damage its reputation, and lead to lawsuits if confidential information is compromised.
Micron informs investors that it is subject to responsible sourcing requirements relating to the materials, supplies, and services that go into the products it sells. It explains that meeting the responsible sourcing requirements may increase its operating costs and limit its sourcing options. Micron further explains it may need to drop a supplier if it fails to meet its responsible sourcing requirements, or some customers may stop purchasing from Micron. However, the company warns that it may be difficult to replace a removed supplier in a cost-effective or timely manner.
Micron sometimes builds system-level products to customer specifications. But developing such products usually takes more time than making regular products, and costs may increase. As a result, Micron may be unable to generate sufficient profit from system-level products built to customer requirements. Moreover, the company cautions that increasing sales of custom products may leave it dependent on specific customers.
The Finance and Corporate risk factor’s sector average is 52%, versus Micron’s 24%. Micron’s stock has gained 22% over the past year.
Analysts’ Take
UBS analyst Timothy Arcuri recently reiterated a Buy rating on Micron stock and raised the price target to $115 from $105. Arcuri’s new price target suggests 21.76% upside potential.
Consensus among analysts is a Strong Buy based on 19 Buys, 4 Holds, and 1 Sell. The average Micron price target of $109.35 implies 15.78% upside potential to current levels.
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