Micron Gains 4% On 2Q Earnings Beat And Strong Outlook

Shares of Micron Technology gained 4.1% in Wednesday’s extended trading session after the memory chip maker delivered better-than-expected 2Q results and provided guidance for the current quarter that exceeded analysts’ expectations.

Micron’s (MU) 2Q adjusted earnings jumped to $0.98 per share from $0.45 reported in the year-ago quarter. Moreover, the bottom-line result topped Street estimates of $0.95 per share.

Revenues jumped 30% to $6.24 billion and came in ahead of the consensus estimates of $6.21 billion.

The company’s CEO Sanjay Mehrotra said, “Micron’s strong fiscal second quarter performance reflects rapidly improving market conditions and continued solid execution.” He further added, “Our technology leadership in both DRAM and NAND places Micron in an excellent position to capitalize on the secular demand driven by AI and 5G, and to deliver new levels of user experience and innovation across the data center and intelligent edge.” (See Micron stock analysis on TipRanks)

For 3Q, the memory chip maker expects to generate revenues of approximately $7.1 billion (+/- $200 million), which is significantly higher than Wall Street’s estimates of $6.86 billion. Its adjusted earnings guidance of $1.62 (+/- $0.07) per share is also higher than analysts’ expectations of $1.33.

Ahead of the earnings release, Rosenblatt Securities analyst Hans Mosesmann reiterated a Buy rating and price target of $150 (70% upside potential) on the stock.

In a note to investors, Mosesmann wrote, “We continue to believe Micron is at the epicenter of a multi-year secular demand dynamic driven by AI (Artificial Intelligence) workloads, automotive, etc. that will lead to increased DRAM content, consistent with our view of this cycle being the “Mother of All Cycles” (MOAC). We reiterate MU as a top pick for the Mother of All Cycles and continue to see Micron’s 1α DRAM and 176-layer NAND helping the company maintain a competitive position against the competition.”

Overall, consensus among analysts is a Strong Buy based on 23 Buys and 3 Holds. The average analyst price target of $115.77 implies upside potential of about 31% to current levels. Shares have gained about 109.7% in one year.

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