Micron (MU) is scheduled to report results of its fiscal third quarter after the market close on Thursday, June 30, with a conference call scheduled for 4:30 pm ET. What to watch for:
1. GUIDANCE: Along with its last report, Micron guided for Q3 earnings per share of $2.46, plus or minus 10c, on revenue of $8.7B, plus or minus $200M. At the time, analysts were expecting the company to report Q3 EPS of $2.21 on revenue of $8.06B, but those figures have since risen to $2.44 and $8.63B, respectively.
2. PIPER: This week, Piper Sandler analyst Weston Twigg noted that inSpectrum released its June monthly memory contract pricing, stating that he monitors the three-month rolling average year-over-year change to better gauge trends. Based on this metric, DRAM pricing declines accelerated, while 256Gb TLC NAND "declined for the first time since mid-2021," according to Twigg, who calls the implications of the memory pricing declines "negative" for both semiconductor equipment names he covers and for Micron, which is covered by Harsh Kumar at the firm. In a decelerating or declining memory capex environment, semiconductor equipment stocks may become range-bound, said Twigg, who noted that Lam Research (LRCX) typically has higher relative exposure to memory capex, followed by Applied Materials (AMAT), KLA Corp. (KLAC) and ASML (ASML).
3. CITI: Citi analyst Christopher Danely said that, based on numerous conversations with investors, the market expects Micron to guide below consensus, with most investors expecting a revenue guide down 5% quarter-over-quarter and gross margins guided down 2%-3% to around 45%. The analyst believes a gross margin guide to the low 40's would weaken the stock. However, he believes Micron shares are close to a "trough valuation" and would be buying Micron for investors with a medium to longer-term time horizon. Danely reiterated a Buy rating on the shares with an $85 price target.
4. BOFA: Meanwhile, BofA analyst Vivek Arya lowered the firm's price target on Micron Technology to $70 from $100 and maintained a Buy rating on the shares earlier this week. Semiconductor downturns happen every three-to-four years, and "we could be due for another one," Arya told investors in a research note. The analyst added that tighter global monetary policy, geopolitical turmoil and consumer weakness is likely to pressure chip demand in the second half of 2022 and 2023. However, unit weakness "could be cushioned by richer non-consumer mix, robust pricing, expanding content, and constrained supply," said Arya. He cut his 2022 semi sales forecast to $608B and 2023 forecast to $604B.
Micron
-0.02 (-0.04%)
Applied Materials
+0.535 (+0.58%)
KLA Corp.
+2.1 (+0.65%)
ASML
-3.9 (-0.81%)
Lam Research
+6.6 (+1.55%)