Micron Technology, Inc.

MU Details

Micron Technology, Inc. (NASDAQ: MU) is a global pioneer in memory and storage technology solutions. Its Micron and Crucial brands provide a range of high-performance Dynamic random access memory (DRAM), NAND, and NOR memory and storage solutions. MU has offices in the United States, Taiwan, Mainland China, Hong Kong, Japan, and other countries. Compute and Networking Business Unit (CNBU), Mobile Business Unit (MBU), Storage Business Unit (SBU), and Embedded Business Unit (EBU) are some of the company's business units.

Launch of Micron 7400 SSD with NVMe: MU announced the release of the Micron 7400 SSD with NVMe on October 06, 2021, which provides industry-leading form-factor flexibility, PCIe Gen4 speed, and cutting-edge security to suit the storage demands of demanding data center workloads. With this product, MU now offers the most comprehensive range of mainstream data center solid-state drives (SSDs) on the market.

FY21 Results: The company reported an increase of 29.25% in revenues to USD 27.71 billion in FY21 (ended September 02, 2021) compared to USD 21.44 billion in FY20 (ended September 03, 2020) primarily due to increase in DRAM and NAND sales. As a result, MU witnessed a significant increase in net income to USD 5.86 billion in FY21 vs. USD 2.71 billion in FY20. As of September 02, 2021, its cash and cash equivalents were USD 8.63 billion, with a total debt of USD 6.78 billion.

Key Risks: Sales to WPG Holdings Limited accounted for 13% of MU's overall revenue in FY21. For FY20 and FY19, Kingston Technology Company, Inc. accounted for 11% of the total revenue. Huawei Technologies Co. Ltd. accounted for 12% of total sales in FY19. The company's financial and operational health might be jeopardized in the future if it places too much dependence on a few critical customers for income.

Outlook:

Q1FY22 Guidance (Source: Q4FY21 Results Presentation, September 28, 2021)

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

MU Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: MU's share price has fallen 27.06% in the past six months and is currently leaning towards the mid-band of the 52-week range of USD 49.30 to USD 96.96. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 36.19. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 87.16. Considering the significant correction in the stock price in the past six months, new product launches, steady dividend, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 69.71, down 0.58% as of October 11, 2021, at 1:35 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Weibo Corporation

WB Details

Weibo Corporation (NASDAQ: WB) is a Chinese social media platform that allows users to share, produce, and discover digital content. In addition, its advertising and marketing customers may utilize it to advertise their brands, goods, and services to users. The selling of advertising and marketing services, including social display advertisements and promoted marketing products, accounts for the vast bulk of WB's revenue. It had 566 million monthly active users (MAUs) and 246 million average daily active users (DAUs) as of June 2021. As of October 11, 2021, the company's market capitalization stood at USD 11.06 billion, with 227.85 million American Depository Shares (ADS) listed and outstanding (each ADS representing one Class A ordinary shares).

H1FY21 Results: The company reported a massive surge of 45.38% in net revenues to USD 1.03 billion during H1FY21 (ended June 30, 2021) compared to USD                710.78 million during H1FY20, due to an increase in revenue in both advertising and marketing as well as value-added services. However, its net income declined to USD 129.95 million during H1FY21 vs. USD 250.00 million reported in H1FY20. As of June 30, 2021, its cash and cash equivalents (including short term investments) were USD 2.94 billion, with total debt (including Unsecured senior notes and Convertible Debt) of USD 2.43 billion.

Key Risks: WB's Class B common stock has three votes per share, compared to one for Class A common stock. As a result, SINA Corporation (as of February 28, 2021) owned about 44.7% of the company's total outstanding common shares and 70.8% of the voting power due to this disparity in voting powers. This concentration of voting power hampers other shareholders' ability to influence business affairs.

Moreover, the Chinese authorities' recent crackdown on its US-listed businesses and the consequent possibility of stricter rules could dent the company's operations. This is after the passage of a bill in the US that could lead to the delisting of some Chinese companies from the country's exchanges (in case the US authorities cannot satisfactorily audit the company for three consecutive years). These constitute significant political and regulatory risks for the firm.

Outlook: In its Q2FY21 earnings report, WB indicated that it anticipates revenue to rise by 20-25 % YoY in Q3FY21 on a constant currency basis.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

WB Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: WB's share price has fallen 20.23% in the past three months and is currently leaning towards the mid-band of the 52-week range of USD 37.30 to USD 64.70. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 47.03. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 58.89. Considering the significant correction in the stock price in the past three months, robust financial performance, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 48.11, down 0.93%, as of October 11, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached. 

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