Micron (MU) will be in the spotlight when it reports fiscal fourth-quarter results tomorrow afternoon. As the countdown to Micron earnings begins, RBC’s top analyst Amit Daryanani is out with a bullish research note, providing commentary and setting expectations for the chip giant’s report.
Daryanani’s FQ4 revenue and EPS estimates stand at $8.2 billion and $3.30, compared to Street estimates of $8.2 billion and $3.3, respectively. For FY19, Daryanani models $31.4 billion and $10.86 vs. consensus of $32.2 billion and $11.18, respectively.
Daryanani commented, “We expect MU to report Aug-qtr largely in line with Street estimates, which are slightly above the mid point of the company’s guidance. We think investors would be primarily focused on Nov-qtr guide and although Street Nov-qtr estimates have come down a bit over the past month, we are slightly conservative vs. Street levels. We think 11-12% NAND ASP decline and low/mid single digit DRAM ASP declines are reasonable in Nov-qtr. Cost down commentary on NAND/DRAM and updates on scaling would be the key in preserving gross margins in the business. Investors will likely look at capex outlook and any push-outs or a conservative stance by the company would be positive from a cyclicality standpoint. We expect MU will initiate its buyback program and given current price levels could be aggressive and surprise positively.”
Bottom line: “We remain bullish on MU and think the company has levers outside of memory headwinds (portfolio mix and buybacks), which should help underlying EPS.”
As such, Daryanani reiterates an Outperform rating on Micron shares, with a price target of $70, which represents a potential upside of 55% from where the stock is currently trading.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Amit Daryanani has a yearly average return of 23.8% and a 79% success rate. Daryanani has a -13.4% average return when recommending MU, and is ranked #37 out of 4876 analysts.
Wall Street is overwhelmingly putting its chips behind this chip giant, as TipRanks analytics exhibit MU as a Strong Buy. Based on 22 analysts polled in the last 3 months, 17 are bullish on Micron stock while 5 remain sidelined. The 12-month average price target stands at $75.73, marking a nearly 68% upside from where the stock is currently trading. (See MU’s price targets and analyst ratings on TipRanks)