🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Micron Rises on Beat-and-Raise, Analyst Sees More Near-Term Upside for Shares

Published 03/30/2022, 04:50 AM
Updated 03/30/2022, 05:21 AM
© Reuters.  Micron (MU) Stock Rises on Beat-and-raise, Analyst Sees More Near-term Upside for Shares
MU
-

Shares of Micron Technology (NASDAQ:MU) are up roughly 4.5% in premarket trading Wednesday after the chipmaker released a stronger-than-expected adjusted revenue forecast for the third quarter.

Micron reported Q2 adjusted EPS of $2.14, up from 98c in the year-ago period, topping the consensus estimates of $1.99 per share. Adjusted revenue in Q2 came in at $7.79 billion, up 25% YoY and above the consensus projection of $7.55 billion.

The adjusted gross margin was 47.8% in the period, up from 32.9% last year and compared to the analyst consensus of 46.1%. Micron reported Q2 cash flow from operations of $3.63 billion, up 19% YoY and below the analyst consensus of $3.95 billion.

For the third quarter, Micron expects adjusted EPS in the range of $2.36 to $2.56, beating the expected $2.24 per share. The company expects revenue in the range of $8.5 billion to $8.9 billion in the second quarter, also above the consensus estimates of $8.2 billion.

The chipmaker expects the gross margin to be in the range of 47% to 49%, compared to analyst expectations of 47%.

Micron's excellent second-quarter results exceeded the high end of our guidance for both revenue and margin, reflecting our strong execution, said Micron Technology President and CEO Sanjay Mehrotra.

We're leading the industry in technology across DRAM and NAND, and our product portfolio momentum is accelerating. With outstanding first-half results, Micron is on track to deliver record revenue and robust profitability in fiscal 2022.

Evercore ISI analyst C.J. Muse reiterated an Outperform rating and a Top Pick designation on MU stock following strong results.

The highlight for the February Q (as well as into May Q) was mix and operational excellence, with execution across 1A/176L/front-end and back-end operations enabling the company to push through rising supply chain costs and deliver very solid upside to gross margins (180bps/100bps better than consensus), the analyst said in a client note.

Moreover, Muse sees a path to the mid-$90s for MU shares as a next stop, an upgrade to his prior forecast of an expected move to the mid-$80s. The analyst has a $120.00 per share price target on MU shares.

Goldman Sachs analyst Toshiya Hari reiterated a Buy rating and lowered the price target to $100.00 per share from the prior $110.00 on MU following a solid beat-and-raise quarter.

We maintain our Buy rating on the stock based on 1) disciplined industry supply dynamics, 2) tightness in Wafer Fab Equipment (which we believe will cap the rate of supply growth for the next 12-18 months), and 3) positive market share and mix dynamics that are idiosyncratic to MU, Hari wrote to clients.

By Senad Karaahmetovic

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.