Forward of Micron’s (MU) fiscal fourth quarter assertion (August quarter), the corporate stated income will likely are available at or beneath the low finish of its beforehand guided vary of $6.8-7.6 billion. The reminiscence big pointed to finish demand softness in PCs and Smartphones and a better than anticipated want by clients to scale back inventories as the explanations behind the downturn.
That definitely performed out; in FQ4, income fell by 19.7% from the identical interval final 12 months to $6.64 billion, in flip lacking the Avenue’s name by $140 million. The corporate managed a greater efficiency on the profitability profile, as FQ4 adj. EPS of $1.45 beat the Avenue’s expectation for $1.37.
Nonetheless, the corporate missed huge on the outlook, with administration noting “macroeconomic uncertainty is excessive and visibility is low.”
For the November quarter (FQ1), Micron is forecasting revenues of $4.25 billion, a way under the consensus estimate of $5.75 billion. Likewise on the bottom-line; the corporate expects EPS of $0.04 on the mid-point, however the Avenue was in search of $0.72.
Nonetheless, bucking the development of shares falling off a cliff following such a disappointing outlook, MU shares had no such downside within the subsequent session, even tilting barely into the inexperienced on one other down day for the markets.
And that might be right down to the Avenue already anticipating the worst. Moreover, boosting confidence within the long-term story, as Rosenblatt’s Hans Mosesmann says, Micron has “signaled the November quarter as a backside with the February quarter the transition level of demand and provide beginning the method of balancing.”
As such, there’s no change to the tone of Wall Avenue’s most distinguished MU bull, who calls the corporate the “greatest cycle play for 2023.”
“We like the chance/reward right here for MU as traders looking for consolation in some visibility of a backside now have this with the information into early 2023,” the 5-star analyst stated. “The trade provide development of mid-single digits for DRAM could also be a low development charge because the 90s and units up a provide/ demand dynamic that’s extremely enticing for traders on a reminiscence/storage snapback in 2024 and certain S/D mismatch into 2024.”
To this finish, Mosesmann reiterated a Purchase ranking backed by a $100 worth goal. The implication for traders? Upside of 100% from present ranges. (To observe Mosesmann’s observe report, click on right here)
Not all again Mosesmann’s stance; whereas the inventory receives 20 Buys, with the addition of 5 Holds and a couple of Sells, the analyst consensus charges this identify a Reasonable Purchase. Going by the $65.4 common goal, traders might be sitting on returns of 30% a 12 months from now. (See Micron inventory forecast on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is rather necessary to do your individual evaluation earlier than making any funding.
