Taking Stock of Micron’s Risk Factors

Micron Technology, Inc. (MU) provides innovative memory and storage solutions. Through its subsidiaries, the company manufactures and markets DRAM, NAND, and NOR memory and storage products.

Let’s take a look at Micron’s recent Q4 performance and understand what has changed in its key risk factors that investors should know.

Micron’s Q4 revenue jumped 36.6% year-over-year to $8.27 billion, outperforming analysts’ expectations by $61.6 million.

The President and CEO of Micron, Sanjay Mehrotra, said, “In Fiscal 2021, we established DRAM and NAND technology leadership, drove record revenues across multiple markets, and initiated a quarterly dividend. The demand outlook for 2022 is strong, and Micron is delivering innovative solutions to our customers, fueling our long-term growth.”

Significantly, gross margin expanded to 47.9% from 34.9% a year ago. Earnings of $2.42 per share were better than the Street estimates by $0.08 per share. The company had generated earnings of $1.08 per share in the same quarter last year.

Looking ahead, Micron expects Q1 Fiscal 2022 revenue to be in the $200 million range from $7.65 billion and earnings per share to be between $2 and $2.20. (See Insiders’ Hot Stocks on TipRanks)

On September 30, Rosenblatt Securities analyst Hans Mosesmann assigned a Buy rating to the stock and a price target of $165.

Commenting on the current component shortage dynamics, Mosesmann said, “As we enter 2022, we see Micron’s customers progressively seeing component shortages being more pronounced on the memory side of platform bill-of-materials (BOM) than non-memory.”

Based on 17 Buys and 4 Holds, consensus on the Street is a Strong Buy. The average Micron price target of $100.95 implies 44% upside potential for the stock.

Now, let’s look at what’s changed in the company’s key risk factors.

According to the new Tipranks’ Risk Factors tool, Micron’s top two risk categories are Finance & Corporate and Legal & Regulatory, which account for 24% each of the total 38 risks identified. In its recent annual report, the company has added one key risk factor under the Finance & Corporate risk category.

Micron highlights that there can be no assurance that it will continue to declare cash dividends. The company currently pays dividends on a quarterly basis. Future dividends, timing and amounts can be impacted by different factors such as Micron’s financial condition, capital requirements, business scenario, debt levels, regulatory constraints and other factors. 

Any decrease in or cessation of dividend payments could have an adverse impact on the company’s share price.

The Finance & Corporate risk factor’s sector average is at 50%, compared to Micron’s 24%. Shares are up 38.4% over the past 12 months.

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