NEW YORK (TheStreet) -- Shares of Micron Technology (MU) - Get Report are down by 4.57% to $19.20 in midday trading on Monday, following a Reuters report suggesting that the company believes an acquisition by China-based Tsinghua Unigroup is unrealistic.
Micron stock jumped last week when Tsinghua made a $23 billion bid for the semiconductor company.
The company believes authorities in the U.S. will block the deal on concerns over national security, sources told Reuters.
Micron anticipates that CFIUS, or the Committee on Foreign Investment in the U.S., will step in and keep the transaction from moving forward.
CFIUS has the power to stop company mergers that could potentially endanger national security, Reuters noted.
Tsinghua is the industry leader in China's up and coming chip industry, according to Reuters.
Acquiring Boise, Idaho-based Micron would be a key step in moving the Chinese industry forward.
Separately, TheStreet Ratings team rates MICRON TECHNOLOGY INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICRON TECHNOLOGY INC (MU) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, MU has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
- 48.66% is the gross profit margin for MICRON TECHNOLOGY INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.74% trails the industry average.
- MICRON TECHNOLOGY INC's earnings per share declined by 38.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MICRON TECHNOLOGY INC increased its bottom line by earning $2.55 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus $2.55).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.8%. Since the same quarter one year prior, revenues slightly dropped by 3.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: MU Ratings Report