Micron Technology, Inc (NASDAQ:MU) jumped over 2% to $49.88 in pre trading session as the firm plans to publish on September 29 its third quarter earnings. Rosenblatt analyst Hans Mosesmann anticipates revenues and non-GAAP EPS to be basically in line with his projections of $6.70 billion and $1.24, respectively, which are lower than the consensus of $6.82 billion and $1.39. He reaffirmed his Buy rating and a price target of $100.
Micron management had already reported a dismal August quarter due to sustained demand deterioration and inventory reductions in the PC and smartphone market sectors. He expects revenue and gross margins to decline sequentially in the November quarter as bit shipment growth continues to weaken in the short term.
He anticipates a sequential decline in gross margins for the quarter and looks forward to the call for more information on the margin projection for FY23. Because of the company’s inability to cut capex fast this quarter due to key new technology product investments, FCF for Q1 FY23 will most certainly be negative.
In 2022, the company’s shares are down more than 47%, and investors will be looking for something to cheer about when the semiconductor manufacturing giant releases its earnings report.
A Morgan Stanley analyst said in a letter to clients ahead of the data that “while the stock falls, the proximity to book value has obviously flipped sentiment firmly to the positive side, based on our interactions; we don’t expect anything to come out of these results that would dissuade that.”
They continue to feel that there is too much optimism regarding the 1h23 rebound. “We expect volumes to improve as customer inventory drawdowns slow,” the analyst wrote. “However, the pace of inventory builds (15-20 days of inventory build on Micron’s balance sheet in each August and November quarter) would suggest that even with a 10%+ volume recovery in the seasonally weak quarter, the company would still be building 10+ days of inventory – which continues to pressure the market.”
In another letter to investors, a Susquehanna analyst stated that their updated projections “include lower UR as MU, along with the industry, gets proactive in working down inventory (by lowering wafer starts).”
“We now anticipate a rough quarterly EPS of $0.25.” “A BV of $45 should be viewed as the downside risk,” the analyst noted.
Meanwhile, a Cowen analyst said another Micron estimate decrease is “sort of expected” at this point.
“We are still below the Street for the coming fiscal year.” The buy-side is still pessimistic. While the stock is selling at book value and we do not see much downside…the difficulty for investors is that there is not much NT upside. Memory fundamentals are difficult, but MU is a company worth considering for long-term investors,” noted the analyst.
Micron (MU) Stock Price Target Cut by Analyst
An analyst at Wedbush, Matt Bryson cutting his price target by 24% for Micron Technology shares. But he is adding that the semiconductor company is “in a better position” even as adversity mounts. Bryson claims that chip-market circumstances have deteriorated since Micron warned of a revenue deficit in early August, citing lower-than-expected demand and “sharply falling” memory pricing.
Bryson reduced his price objective for the company from $85 to $65, but he maintained his outperform rating from February, noting valuations. Micron has an extremely limited downside from present price levels,” Bryson said in a client letter. “It is worth noting that MU is normally just 10% over book value, with MU trading around book value.” down 46.2% year to Friday.
