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Micron (MU) Earnings: Is a Worst-Case Scenario Already Priced In?

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Last June, on a conference call with analysts, Micron Technology (MU, $74.05) CEO Sanjay Mehrotra cited "cost headwinds" the chipmaker is facing in fiscal 2022 due to a "strategic portfolio migration toward more advanced and higher-value products." Mehrotra also pointed to efforts to increase MU's resilience to supply chain disruptions as a factor in rising costs.

In reaction, MU shares slid 5.7%, even as the company reported higher-than-anticipated earnings and revenues for its fiscal third quarter and gave upbeat guidance for its fiscal fourth quarter.

The stock has just extended its slide since that report. An early August note from Susquehanna Financial Group analysts Christopher Rolland and Duksan Jang suggesting the lead times for the semiconductor industry are now in the "danger zone" only created bigger headwinds.

MU is in negative territory for the year-to-date, but Susquehanna analyst Mehdi Hosseini isn't too concerned. He thinks the market has just been pricing in a "worst-case scenario" for near-term average selling prices (ASP) trends, which appear to be flattening for DRAM and NAND chips. He argues that the semiconductor stock "already reflects this........

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