Are Micron Technology(NASDAQ: MU) shares about to rise by nearly 20%? Analyst Sidney Ho of Deutsche Bank thinks so; he upgraded his recommendation on the stock from neutral to buy, with a $60 per share price target (the company’s most recent closing level was $50.68).
Ho believes that while the market for the DRAM, or dynamic random access memory, chips that the company specializes in will hit a low in the fourth quarter of this year, a rebound is in store. In his view, recent data indicate that demand for such products has risen in both the mobile and PC server segments. This should result in price increases in Q1 of next year.
Image source: Getty Images.
Micron’s business has suffered lately because of two factors. The first is the coronavirus pandemic. As with other businesses throughout the global economy, the company has been badly affected by softening demand
My coverage on Micron Technology (MU) has been lacking so far in 2020 as the year was and continues to be dominated by Covid-19. In fact, the last update dates back late December as I concluded that a recovery was priced into the shares at $55 at the time.
Shares have fallen by another $10 to $45 due to the impact of Covid-19; yet unlike many semiconductor plays, Micron has not been enjoying the same momentum in its operating business. I like the valuation here, yet am not chasing shares here yet, although I am inclined to buy a further dip.
Over the past decade, Micron has been riding the wave of increased demand for its products for all the obvious reasons and megatrends, which have been underlining the increase in demand. While its business is typically somewhat of a commodity business (certainly in the past) on a
Micron Technology, Inc. (NASDAQ:MU) Q4 2020 Results Earnings Conference Call September 29, 2020 4:30 PM ET
Farhan Ahmad – Vice President, Investor Relations
Sanjay Mehrotra – President and CEO
Dave Zinsner – Chief Financial Officer
Conference Call Participants
Toshiya Hari – Goldman Sachs
John Pitzer – Credit Suisse
C.J. Muse – Evercore
Blayne Curtis – Barclays
Harlan Sur – JP Morgan
Timothy Arcuri – UBS
Mitch Steves – RBC Capital
Ambrish Srivastava – BMO
Good afternoon. My name is Sheri, and I will be your conference facilitator today. At this time, I would like to welcome everyone to Micron’s Fourth Quarter 2020 Financial Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. [Operator Instructions]
Thank you. It is now my pleasure to turn the floor over to your host, Farhan Ahmad,
(Reuters) – Micron Technology Inc has not yet obtained new licenses needed to sell its memory chips to China’s Huawei Technologies Co Ltd, which will cut its sales over the next two quarters, company executives said on Tuesday.
Boise, Idaho-based Micron, one of the world’s biggest makers of DRAM chips, said it had previously obtained licenses from the U.S. government to sell chips for mobile phones and servers from its factories outside the United States to Huawei, which has been the target of U.S. restrictions on chip sales since last year.
Huawei accounted for about $600 million of Micron’s $6.06 billion in sales for the fiscal fourth quarter ended Sept. 3, or just under 10%.
Though it once more topped estimates, a light EPS outlook and mixed demand commentary is weighing on Micron’s (MU) stock post-earnings.
On Tuesday afternoon, the memory giant reported August quarter (fiscal fourth quarter) revenue of $6.06 billion (up 24% annually) and non-GAAP EPS of $1.23. Those numbers respectively beat FactSet consensus estimates of $5.89 billion and $0.98, thus continuing a recent string of sales and EPS beats.
On the flip side, Micron guided for November quarter revenue of $5 billion to $5.4 billion (down 3% to up 5% annually) and non-GAAP EPS of $0.40 to $0.54. Those numbers respectively compare with consensus estimates of $5.27 billion and $0.66.
As of the time of this article, Micron’s stock is down 3.5% in after-hours trading to $48.92. Shares were initially trading following the release of Micron’s report, but sold off after Micron shared its earnings presentation and prepared remarks.
Micron Technology(NASDAQ: MU) shares were taking a hit late Tuesday afternoon, following the company’s release of its fourth quarter of fiscal 2020 results after market hours.
For the quarter, the computer and mobile device memory maker actually posted encouraging fundamentals. Revenue for the period came in at $6.06 billion, a sturdy 24% higher than the same period in 2019. Non-GAAP (adjusted) net profit nearly doubled, to just under $1.23 billion ($1.08) from the year-ago result of $637 million.
Both results comfortably topped analyst estimates. Collectively, prognosticators tracking the stock were modeling $5.89 billion on the top line, and an adjusted per-share net profit of $0.98.
Image source: Getty Images.
However, Micron’s guidance fell short of expectations. The company is estimating that for first quarter 2021, it will book revenue of $5.0 billion to $5.4 billion, and adjusted net earnings of $0.40 to $0.54 per share. While the former range
Micron Technology, the vendor of DRAM and NAND memory chips, Tuesday afternoon reported fiscal fourth quarter revenue and profit that topped analysts’ expectations, but a forecast for this quarter that was merely in line as far as revenue, and below consensus on earnings.
CEO Sanay Mehrotra cited “strong” sales of DRAM chips for cloud computing, PCs, and gaming consoles, as well as “an extraordinary increase in QLC NAND shipments,” the most advanced type of NAND flash that Micron makes.
Mehrotra said the rest of 2020 should see “improving market conditions,” thanks to 5G, cloud computing, and the automotive market.
Gross profit margin in the quarter rose to 34.1% from 32.4% in the prior quarter and 28.6% a year earlier.
Revenue in the three months ended in August rose to $6.06 billion, yielding EPS of $1.08. Analysts had been modeling $5.89 billion and 98 cents per share.
Chicago, IL – September 28, 2020 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes JPMorgan Chase & Co. JPM, Citigroup Inc. C, PepsiCo, Inc. PEP and Micron Technology, Inc. MU.
Handicapping Q3 Earnings Season
The overall earnings picture has been steadily improving over the last three months as big parts of the U.S. economy have started coming out of the pandemic-driven lockdown. The market will be looking for this improving earnings trend to accelerate in the Q3 earnings season.
The wide majority of companies have fiscal quarters that correspond with the calendar quarters, which is September 30th for Q3. These calendar-quarter companies will start reporting Q3 results after September 30th. Back in the day when Alcoa was in all the major indexes, the aluminum producer was generally seen as kick-starting quarterly reporting cycles.
A Citi analyst on Monday opened a negative catalyst watch on shares of Micron Technology (MU) – Get Report, a day before the semiconductor company is scheduled to report fourth-quarter earnings.
Shares of the Boise, Idaho, company at last check were up 0.4% at $49.31.
Analyst Christopher Danely, who has a sell rating on the shares with a $35 price target, said he expected Micron to report sales below guidance of $6 billion but in line with his $5.5 billion estimate due to what he called a double dip in DRAM.
The analyst also expects the stock to trade lower on the report and would be more constructive on the stock in the mid $30s, according to The Fly.
Last week, TheStreet.com Founder Jim Cramer said on CNBC that “Micron’s core DRAM business could be saved by their disk drive business, but I don’t see the stock