Micron Technology Inc. (NASDAQ: MU) will release its Q4 2021 earnings today, September 28, 2021, after market close.
What to look for
Micron's fiscal Q4 earnings are expected to have been driven by considerable chip demand by data-center operators and PC manufacturers due to the stay-at-home restrictions. In addition, with the increase in remote working and students learning from home, the demand for PCs and notebooks has been enormous.
Demand for cloud storage has also been fueled by online learning and remote working trends. Additionally, global lockdowns have increased the use of internet and e-commerce services, forcing data-center operators to expand their capacity to meet the surge in demand for cloud services. These factors are expected to boost Micron’s top line for the current quarter under review. Micron depends heavily on China which is a headwind that will affect revenue because of the ongoing US-China trade wars. The restrictions on Huawei exports could hurt topline growth for the company.
Earnings: Stockearning’s Estimated EPS for Q4 is $2.23 per share, a 115% YoY growth from Q4 2020. In the past 12 quarters, the company has topped earnings estimates ten times (83%) and missed once (8%). Therefore, chances are the company will top its earnings estimates when it releases Q4 earnings. In Q3, the company topped EPS estimates of $1.63 and reported actual EPS of $1.83.
Revenue: Micron expects Q4 revenue to be around $8.2 billion representing YoY revenue growth of 30%. In Q3, the company reported revenue of $7.42 billion, a 35% jump from Q3 2020. In addition, the company set multiple product and market revenue records in Q3 with the largest sequential-quarter earnings improvement in its history.
Stock movement: Since the last earnings release, Micron shares have lost 12.9%, from $84.98 to $74.05. Following the earnings release, Micron's share price has been DOWN 26 times in the past 45 quarters. Therefore, the historic price reaction suggests a 57% chance for the share price to be DOWN once the company releases Q4 2021 results. According to the Stockearning algorithm, the predicted first-day move for the stock price is 6%, and the predicted move on the seventh day is 8%.
What analysts are saying
Raymond James analyst Chris Caso reduced his price target for the stock from $120 to $100 but maintained a “Strong Buy” rating ahead of the earnings release. Caso indicated in a research note that Micron management had signaled well the weakness in PC business during an investors conference over the quarter, which is expected. The analyst believes there is strong demand outside the PC segment, and the DRAM segment is yet to build excess supply.
Also, Citi analyst Christopher Danely lowered his price target in Micron from $135 to $120 but maintained a “Buy” rating on the stock. Danely cut estimates because of upcoming DRAM correction and anticipates DRAM prices to drop 5-10% QoQ in Q4 and 10% in the first quarter of 2022 before recovering in 2H 2022.
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