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Guilfoyle: Micron Is a Buy

Even with mixed quarterly results, the chip maker is seeing double-digit sales growth and has a strong balance sheet.

Memory chip giant Micron Technology  (MU) - Get Micron Technology, Inc. (MU) Report  is a good addition to a portfolio despite its mixed fiscal fourth quarter results, Real Money’s Stephen “Sarge” Guilfoyle argues.

The company recently reported adjusted earnings of $2.42 per share and GAAP EPS of $2.39, which both beat Wall Street estimates. Micron generated $8.27 billion in revenue during the quarter, an annual growth of 36.5%. "By the way, this was Micron's third consecutive quarter putting together year-over-year sales growth of greater than 30%." Guilfoyle wrote in a recent Real Money column.

Another positive metric was Micron reported its operating income rose to $3.07 billion compared to $1.3 billion a year ago, which was an operating margin of 37.1% and an increase from 21.5% last year.  Micron reported net income of $2.78 billion, compared to $1.23 billion and operating cash flow reached $3.89 billion, an increase from $2.3 billion.

But Micron sees a lot of challenges related to the ongoing global pandemic in its future and said it estimates current-quarter revenue of $7.45 billion to $7.85 billion, which falls well below the consensus $8.6 billion.

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Micron also forecasted fiscal first quarter EPS in the range of $2.00 to $2.20, which is below the $2.53 average from 24 analysts, Guilfoyle said.

Both the company and its CEO Sanjay Mehrotra show a lot of promise with an “indisputably strong balance sheet,” he wrote.

“I like Micron,” Guilfoyle wrote. “I like Mehrotra. I like MU for an initiation of maybe one-eighth of intended position size below $70.”

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