Microchip and semiconductor maker Micron Technology (MU) - Get Micron Technology, Inc. (MU) Report has recently released its quarterly report. The company posted the highest EPS growth in its history and beat Wall Street analysts' expectations on both the top and bottom lines.
However, the results did not please investors, and the stock saw its price drop almost 4% on Thursday, July 1. The company pointed out that the general scenario of shortages in microchips should remain in place until 2022, which triggered bearishness.
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A Reddit community fail
Between June 29 and July 1, Micron became the focus of attention on Reddit’s WallStreetBets forum (see chart below). At the center of the discussions was the highly anticipated fiscal third quarter earnings report, released after the closing bell on Wednesday.
Despite the Reddit community’s growing interest on MU and the overwhelmingly positive commentary on the forum, the stock could not offset Wall Street's post-earnings pessimism with meme mania-driven bullishness. One of the reasons was probably the size of the company and the trade volume.
Think of GameStop (GME) - Get GameStop Corp. Class A Report, one of the most popular meme stocks around. Micron’s market cap is roughly six times larger than the video game retailer’s. Average daily volume traded is nearly 20 million vs. GME’s 8 million. Reddit’s bullishness was just not enough to drive share price action on Thursday.
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What Wall Street Has Said About MU
Regarding fundamentals, Wall Street analysts weighed in on Micron’s results on Thursday.
On the bearish side, Summit Insight downgraded MU from buy to hold. The change of heart was driven primarily by a belief that contract pricing should peak in the summer, now that inventory is building up in the PC and smartphone supply chains.
Going in the opposite direction, BMO Capital Markets upgraded Micron to outperform, claiming that the stock has upside potential of 30%. According to BMO, the chip shortage could be a positive for pricing. The firm has set a target price on MU at $110.
Other research firms such as UBS and Mizuho maintained their bullish positions, while Keybanc kept its overweight rating untouched.
After the company reported higher-than-expected earnings, Micron stock fell flat on its face and returned to January 2021 levels. How high can $MU reach in the next 12 months?
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)