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Micron: The Cycle’s Better Than Ever But Valuation Lags, Complain the Bulls

Shares of DRAM and NAND memory-chip maker Micron Technology (MU) are down $1.15, or 3.7%, at $30.32, giving up the slight gains it saw last night, after the company easily beat fiscal Q3 expectations, and forecast his quarter’s results higher as well, and showed a dramatic jump in its gross profit margin as it benefits from rising prices and declining costs.

Despite the upbeat outlook, the stock can’t shake the feeling by investors something bad could happen later this year.

During an interview following the report, chief executive Sanjay Mehrotra said the company was seeing more diverse uses than ever for its DRAM chips, helping to lessen the reliance on the personal computer market, and thereby smooth out the cycles of the business.

However, the stock price reflects concerns there will be a sharp decline in Micron’s prospects as soon as the latest surge in chip prices cools off.

As Credit Suisse’s John Pitzer observes this morning, “year-to-date, Micron’s forward twelve-month EPS has increased ~110% versus a stock up ~47% – implying a ~30% contraction...


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