Boise, ID, September 28, 2023 (GLOBE NEWSWIRE) – Micron Technology, Inc. (NASDAQ: MU) released its fiscal fourth-quarter results, offering a mixed outlook for the first quarter amidst ongoing challenges in the chip supply market. Investors initially reacted to the news with a 5% drop in Micron’s stock during early Thursday trading.
The company reported better-than-feared fiscal fourth-quarter results, with an adjusted loss per share of $1.07 on revenue of $4.01 billion. This performance exceeded analysts’ expectations, who had anticipated an adjusted loss of $1.15 per share on revenue of $3.93 billion.
However, Micron faced challenges during the quarter, as gross margins declined to negative 10.8%, compared to 39.5% a year earlier. This decline resulted from a nearly 40% drop in revenue, driven by weaker demand stemming from an oversupply of chips that accumulated during the pandemic.
Looking ahead to the fiscal first quarter, the company provided guidance indicating a loss ranging from $1 to $1.14 per share, compared to a consensus estimate of a loss of $0.92 per share. Revenue projections for the first quarter were set at $4.2 billion to $4.6 billion, slightly below the consensus estimate of $4.22 billion.
Micron’s CEO, Sanjay Mehrotra, expressed optimism about the company’s performance in 2023, positioning it well for the market recovery anticipated in 2024. This recovery is expected to be driven by rising demand and disciplined supply, with the company anticipating record industry Total Addressable Market (TAM) revenue in 2025, particularly as AI adoption expands from data centers to the edge.
During the earnings call, Mehrotra noted that revenue from high-bandwidth memory chips designed for data centers is expected to commence in early 2024.
Market analysts from JPMorgan raised the price target for Micron’s shares to $80 per share, maintaining their Overweight rating. They believe that the memory industry is beginning to show signs of improvement.
Similarly, analysts at Goldman Sachs expressed a positive outlook for Micron, emphasizing their constructive thesis based on improving demand and supply discipline, particularly a reduction in Wafer Fab Equipment spending and wafer starts. They view any stock pullback as an opportunity to add to positions.
In conclusion, Micron’s mixed guidance initially impacted its stock performance, but analysts remain optimistic about its prospects, foreseeing a potential buying opportunity amidst the evolving dynamics of the chip industry.