What to Watch When Micron Reports After the Close

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Micron Technology Inc. (NASDAQ: MU) is set to release its most recent financial results after the markets close on Thursday. The consensus estimates are calling for $0.49 in earnings per share (EPS) and $4.57 billion in revenue. The fiscal first quarter of last year reportedly had $3.53 in EPS and $8.44 billion in revenue.

In a recent report from Wedbush, the firm said that it believes Micron will exceed consensus EPS and revenue estimates for the August quarter being reported, given better pricing conditions versus expectations exiting June.

However, Wedbush also feels this result is widely understood. Looking forward, the firm is optimistic around likely the second half of fiscal 2020 fundamentals (strong product cycle demand and constrained supply adds). Although, the firm is unwilling to get more constructive ahead of softer seasonal demand in the calendar fourth quarter/calendar first quarter and the likelihood this seasonality weighs on memory pricing, particularly now that any slowdown in builds (servers/PCs) could be exacerbated by the apparent return of Intel CPU shortages.

Wedbush reiterated a Neutral rating with a $30 price target, implying downside of 39% from the prior closing price of $49.47. The firm went on to say that Micron has a strong 2020 outlook:

Looking beyond Micron’s likely commentary/guidance, we believe that CY2H’20 fundamentals will almost certainly prove to be extremely positive for memory in light of numerous product cycles. We do expect Micron to forecast lower capex growth (Y/Y), a result that fits with our view that 2020 capacity adds (DRAM and NAND) will trail prior years, creating increased likelihood of shortages if our bullish demand thesis plays out.

Excluding Thursday’s move, Micron had outperformed the broad markets, with its stock up about 56% year to date. In the past 52 weeks, the stock was up only 9.5%.

A few other analysts have weighed in on Micron ahead of the results:

  • Cowen has a Market Perform rating with a $46 price target.
  • BMO Capital Markets rates it as Outperform with a $60 target.
  • JPMorgan has an Overweight rating with a $65 price target.
  • Cleveland Research has a Hold rating.
  • Goldman Sachs has a Buy rating with a $59 price target.
  • Cascend Securities has a Buy rating with a $65 price target.
  • Wells Fargo has an Outperform rating and a $60 price target.

Shares of Micron traded down about 1% to $49.06 on Wednesday, in a 52-week range of $28.39 to $51.39. The consensus price target is $51.31.

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