BMO predicts tough results for Micron Technology

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BMO predicts tough results for Micron Technology

Micron Technology (NASDAQ: MU) We plan to report our fiscal fourth quarter results on September 29, after the market closes. Analysts expect earnings to come in at $6.69 billion, down nearly a quarter from his $9.5 billion estimate in the summer. Consensus forecasts for net income also dropped significantly from his $3.2 billion over the same period to his $1.4 billion.

Analyst price targets have also fallen over the past six months, with the average 12-month price target dropping from $104 in June to $70 today. Micron currently has 37 analysts covering the stock, including 6 strong buy ratings, 20 buy ratings, 9 hold ratings, and finally her two analysts. has a sell rating.

In BMO Capital Markets’ Earnings Preview Note, they reiterated their outperform rating, but lowered their 12-month price target from $85 to $80 and said their paper “will undergo rigorous testing in the next two quarters or so. ‘ said.

They say the reason they maintain an excellent valuation for the stock despite their papers being tested is that while they expect a better balance of supply and demand in 2023, the industry will continue to invest in capex. BMO also commented, “Given the company’s trailing book value of $45 per share is downside support, the risk and reward are optimistic.” It shows what they believe to be heavily skewed upwards.

Micron has already pre-announced its results, and BMO said, based on their research, that the “short to medium-term” outlook for DRAM and NAND Flash is very bleak, with Micron seeing double-digit price declines in both. said it expects to be DRAM and NAND in the next two quarters that could continue.

BMO believes there are many reasons for this. Reasons include “extremely low demand in most end markets, from handsets to PCs, and increasing vulnerabilities and excess inventories in other markets such as data centers.”

As a result, the company expects revenue to decline 22% sequentially to $6.71 billion and earnings per share to be $1.31. Specifically, we expect DRAM revenue to decline 26% to $4.64 billion, with average selling prices down 15%. Finally, they expect the segment’s gross margin to be 42.1%, down from 50.8% last quarter.

Conversely, the company expects Trade NAND segment revenue to decline 16% to $1.93 billion, with average selling prices down 8% sequentially. They expect a 32% gross margin compared to the 37.5% profit Micron saw last quarter.

With these projections, BMO has opted to lower its estimates for 2022 and 2023. This is shown below.

Information for this briefing was obtained through Sedar and Refinitiv. The author has no securities or affiliation associated with this organization. It is not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing any security. Author holds no license.