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Micron (MU) Earnings Preview

by | Jun 30, 2021

Micron (MU) reporting earnings on 6/30 after the close with the Street looking for $1.70 on $7.21B in sales. Next quarter is guided to $2.18 and $7.87B while the FY is $5.57/$27.05B. Shares have closed higher in four of the last six with an average closing move of 4.8% and a max move of 11.09%. The current implied move is 4.66%. Shares are trading in a weekly bull wedge under $85 with a breakout higher targeting recent highs around $95. A move under $75 has quick support back around $73. The $90.36B company trades 7.75X earnings, 3.84X sales, and 12.5X cash. MU was at the JP Morgan tech conference at the end of May and noted that the demand environment remains ‘extremely strong’ while their inventory remains lean. They are seeing supply shortages in DRAM while the NAND environment is stabilizing and even improving in the end of May. They remain cautious overall on industry-wide capex spend. MU may have a positive read through from recent Lenovo, HP and Dell commentary which said robust PC market demand is likely to hold up throughout the year. Analysts have an average target for shares of $107 with a Street High $150. Cowen a buyer into results citing lean channel inventory, benign industry capex, and its technology leadership support fundamentals. The firm also said their analysis of past DRAM cycles suggests the stock may not peak for the next four years. Citi a buyer of dips on earnings as channel checks indicate a potentially weak Q4 as pushouts from the PC and handset supply chains in the semiconductor industry, which combined make up 50% of Micron’s revenue, may result in flat DRAM prices. The firm thinks DRAM pricing will increase in 2022 due to low supply growth. Short interest is 2.15%. Hedge fund ownership fell 12.5%. Polar Capital adding 1.95M shares.

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