Investing

Earnings Preview: Big Expectations for Micron Technology

Paul Ausick

Published: June 29, 2022 9:55 am

Last Updated: June 30, 2022 1:41 pm

The three major U.S. equity indexes closed lower again Tuesday, with the Nasdaq losing 2.98%, the S&P 500 falling 2.01% and the Dow Jones industrials down 1.56%. The only sector to close the day in the green was energy, up 2.7%. On the economic front, the third and final estimate for first-quarter GDP growth was released Wednesday morning. Growth slipped by 1.6% in the quarter, slightly worse than estimates for a decline of 1.5%. The GDP deflator, an inflation measure, rose to 8.2%, again slightly worse than the estimate of 8.1%.

All three indexes traded lower by less than 1% right after Wednesday’s opening bell.

General Mills reported better than expected earnings and revenue for its fiscal third quarter. The company also raised its dividend by 6% to a quarterly rate of $0.54, raising its yield to around 3.1%. Shares traded up about 3% early Wednesday.

Paychex also beat top-line and bottom-line expectations, but the stock traded down about 4%.

Bed Bath & Beyond missed consensus estimates for profits and revenue, and investors were pounding the share price. Early trading has the stock down by more than 21%.

Schnitzer Steel beat estimates on both the top and bottom lines. The stock was up less than 2%.

We already have previewed four companies on deck to report quarterly results before markets open on Thursday: Field Trip Health, NovaGold, Constellation Brands and Walgreens.

Here is a look at one firm scheduled to release quarterly results after Thursday’s closing bell. No earnings reports are on deck for Friday, and U.S. markets are closed Monday for the Independence Day observance.

Shares of semiconductor maker Micron Technology Inc. (NASDAQ: MU) have lost more than 29% over the past 12 months. Since reaching a 52-week high in early January, the stock has dropped by nearly 40%.

By one estimate, the total market for memory chips this year is around $75 billion. Micron’s share of that is expected to surpass 40%, and with demand from data centers, 5G smartphones and the auto industry remaining strong, the company is expected to show solid growth in the third quarter and for fiscal 2022.

Of 35 analysts covering the stock, 30 have a Buy or Strong Buy rating and another four rate the shares at Hold. At a recent share price of around $57.90, the upside potential based on a median price target of $94.00 is about 62.3%. At the high target of $165.00, the upside potential is 185%.

Fiscal third-quarter revenue is forecast at $8.66 billion, which would be up 11.2% sequentially and 16.7% higher year over year. Adjusted earnings per share (EPS) are forecast at $2.45, up 14.4% sequentially and by 30.3% year over year. For the full 2022 fiscal year ending in August, revenue is currently forecast at $33.35 billion, up 20.4%, and EPS are forecast at $9.39, up 55%.

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Micron stock trades at 6.2 times expected 2022 EPS, 5.2 times estimated 2023 earnings of $11.09 and 4.7 times estimated 2024 earnings of 12.34 per share. The stock’s 52-week range is $53.60 to $98.45, and MIcron pays an annual dividend of $0.30 (yield of 0.69%). Total return over the past 12 months was negative 30.3%.