Micron Surges After Q3 Earning Surprise, Second Half Memory Demand Forecast

Micron Technology shares (MU) were markedly higher in the premarketing market Wednesday after the smartphone's chipmaker peaked analysts' forecasts in the third quarter earnings and said it saw a solid rise in demand for memory during the second half.

Micron said non-GAAP earnings for the three months ending May, the company's fiscal third quarter, came in at $ 1.05 per share, down nearly two-thirds from the same period last year, but still well ahead of Street Consensus forecast of 80 cents per share. Also, the group's revenue, topped analysts' forecasts, comes in at $ 4.79 billion, but falls 38.6% from the previous year.

During the current quarter and the next fiscal year, Micron continued to see "healthy annual growth" in the global DRAM semiconductor needs, but additional capex cuts would be needed to create a good balance between supply and demand. demand in current inventories. Micron also said it had started delivering some of the smartphone chips to Huawei Technologies, following the Chinese-backed tech group's blacklisting of the US government on May 1[ads1]5.

"We decided that we could legally continue to submit a subset of current products because they are not subject to export management regulations and entity lists," says Sanjay Mehrotra, CEO of a conference call late Tuesday.

"However, great ongoing uncertainty about the Huawei situation, and we cannot predict volumes or time periods over which we will be able to send products to Huawei, he added. "Micron will continue to comply with all state and legal requirements, just as we do in all our operations globally. Of course, we can't predict if more governments can affect our ability to send to Huawei."

Micron shares were markedly 8.9% higher in pre-market trading Wednesday, indicating an opening watch price of $ 35.60 each, a move that would expand the share's annual change to around 13% and value Boise, Idaho -based chipmaker of around $ 39.3 billion.

"We lower our estimates in a meaningful way, as US-China trade has significantly reduced near-term demand and visibility, in our opinion," said KeyBanc Capital analyst Weston Twigg, who lowered the share price target to $ 45 per share. "However, we continue to see very favorable long-term demand drivers, and we see the quick response from memory manufacturers to limiting supply (especially in DRAM, which accounts for about 70% of MU's revenue) as a positive indication of rational behavior." [19659008]

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