Micron Technology Inc. (NASDAQ: MU) is scheduled to release its fiscal third-quarter financial results after the markets close on Tuesday. The consensus estimates are $0.83 in earnings per share (EPS) and $4.77 billion in revenue. The same period of last year reportedly had $3.15 in EPS and $7.8 billion in revenue.
Micron suffered a downgrade from CFRA Equity Research back in May that so far has proven to be accurate. The stock was cut from Hold to a Strong Sell rating. The firm’s price target was slashed from $46 to $32 as well, implying that the story has deteriorated so much that the bias is very against the stock, even if a big market rally or trade resolution somehow comes from left field.
CFRA cited a below-peer price-to-earnings ratio of 8.5 times the firm’s fiscal year 2020 EPS estimate of $3.75. The report cited low earnings visibility ahead. It also noted that the fiscal year 2019 earnings estimate was lowered to $6.06 from $6.40 per share.
CFRA detailed in its report:
Our downgrade mainly reflects our belief that consensus estimates need to see significant downward revisions. We believe that DRAM prices are unlikely to stabilize in the near term (we estimate over two-thirds of profits) given excessive customer inventories, with both data center and smartphone demand now likely to see more muted sequential growth in 2H.
Overall Micron has underperformed the broad markets, with its stock up nearly 5% year to date. In the past 52 weeks, the stock is actually down 44%.
A few other analysts weighed in on Micron ahead of the report:
- Mizuho has a Buy rating with a $44 price target.
- Robert Baird’s Underperform rating comes with a $28 target.
- JPMorgan has an Overweight rating.
- Merrill Lynch has a Buy rating and a $43 price target.
- Barclays has an Overweight rating with a $40 target price.
- Nomura has a Neutral rating with a $32 price target.
Shares of Micron traded at $33.25 Tuesday afternoon, in a 52-week range of $28.39 to $58.15. The consensus price target is $44.86.
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