Micron Earnings: A Strong Quarter on the Way

Micron Earnings: A Strong Quarter on the Way

Earnings season is well past its peak, but there are still some interesting quarterly reports to pore over. After Monday’s session closes (Dec 20), Micron (MU) will step up to deliver the November quarter’s (F1Q22) financials.

Micron has plenty of support on Wall Street, but none are as bullish as Rosenblatt’s Hans Mosesmann, who expects the memory giant to put on a strong display.

“We see the November quarter being driven by strength across the board, including in data center, mobile, PC, and auto, as well as better than expected bit shipment and pricing trends for both DRAM and NAND,” the 5-star analyst said.

Mosesmann anticipates the quarter’s sales and non-GAAP EPS will come in higher than both his and the Street’s forecast of $7.65 billion/$7.65 billion and $2.10/$2.11, respectively.

As always with Micron, it’s all about DRAM and NAND, and Mosesmann believes there was “better than expected pricing in both.”

For DRAM, with “industry dynamics” on the up there has been strong demand for mobile (MCP revenue), notebooks (graphics are in high demand), PCs (new CPU architectures include Micron products), and servers. There has also been an improvement in Enterprise demand, and the “continued adoption” of cloud, AI, and machine-learning. With supply remaining tight in NAND, Mosesmann expects to see strong demand too.

Looking ahead to the February quarter, Mosesmann expects will by a low single-digit sequential increase while the Street expects a mid-single digit drop. Mosesmann’s non-GAAP EPS estimate of $2.29 is also above the consensus calls for $1.86. The analyst expects Micron’s guide to be in-line with his forecast.

Based on “continued global DRAM tightness, a stronger than expected NAND environment, and overall ASP tailwinds,” Mosesmann says he is “comfortable” with his estimates. In fact, the analyst gives short shrift to one currently held opinion.

“We do not subscribe to the absurd notion that bit demand decelerates below supply in 2022 (necessary for the bear case to work), and believe bit demand will continue to be >23% as historical scaling to logic growth would inform us,” the analyst summed up.

It’s no surprise to learn then that Mosesmann rates MU shares a Buy along with a Street-high $165 price target. The implication for investors? Upside of a plentiful 99%. (To watch Mosesmann’s track record, click here)

What does the rest of the Street think? Looking at the consensus breakdown, opinions from other analysts are more spread out. 6 Buys, 2 Holds and 1 Sell add up to a Moderate Buy consensus. In addition, the $28 average price target indicates 25% upside potential. (See Micron stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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