Micron stock price forecast ahead of earnings: buy or sell?
Micron stock price will be in the spotlight as it publishes its final quarterly results next week. These numbers will come at a time when the MU share price has crashed by about 35% from the year-to-date high, moving it into a deep bear market.
Micron stock braces for earnings
Micron is one of the biggest companies in the semiconductor industry. Its main focus is on industries like Dynamic Random Acces Memory (DRAM), NAND, and NOR memory solutions that are used across the technology industry.
DRAM memory solutions are mostly used in industries like data centers, PCs, automotive, and industrial markets. NAND, on the other hand, are non-volatile and re-writeable semiconductor storage devices used in industries like automotive, printer, and home networking solutions.
Similarly, NOR are memory solutions that are mostly used in the automotive, industrial, and consumer electronics. Micron competes with other top companies like Samsung, SK Hynix, and Western Digital.
Its business has gone through a mixed period in the past few years. Its revenue peaked at over $30.7 billion in 2021 and then plunged to $15.5 billion in the following year. The last financial year results showed that its revenue rose to over $25.1 billion, and analysts predict a swift recovery in the coming years.
Micron’s key challenge has been the relatively soft demand across its business and the rising competition, especially from South Korean companies. Also, its business has been caught up in the ongoing geopolitical tensions between the US and China.
Earnings expectations
The most recent results showed that the company did relatively well, with its annual revenue rising by 60%, while its gross margins expanded by about 30%. Most of this growth was driven by the data center business as investments in artificial intelligence grew.
Micron’s business grew also because of the ongoing recovery in the PC market. Data by Canalys estimated that PC sales grew by 3% in the second quarter as the post-pandemic refresh cycle continued.
On the other hand, Gartner estimated that worldwide PC shipments grew by 5.6% in Q3, with over 17 million PCs shipped. This growth is notable since most computers have a Micron product inside them.
Micron is also benefiting from the robust automobile sector. While the growth is muted, Micron recorded a record year automotive revenue as companies invested in infotainment and ADAS solutions.
These revenues came in at $7.8 billion, a 93% YoY increase. DRAM revenue rose to $5.3 billion, while NAND jumped to $2.4 billion.
Analysts expect that Micron’s business did well in the last quarter. Revenue is expected to come in at $8.7 billion, a 84% annualized growth. The highest estimate by analysts is that its revenue will be $8.92 billion.
For the new financial year, analysts expect that its revenue will be $38 billion, a 51% annual increase. It will then hit $46 billion in the next financial year.
Micron is also expected to boost its profits, with its earnings per share coming in at $1.77, a big increase from the 95 cents loss in 2022. Its EPS in the next two financial years will be $8.78 and $12.98.
Analysts are optimistic that the Micron stock price will bounce back. The average stock forecast is $145, higher than the current $102.50.
Read more: Micron vs. Nvidia: why Micron might be the smarter AI investment
Micron stock price forecast
The daily chart shows that the MU stock price has remained in a tight range in the past few weeks. As a result, it is stuck at the 50-day and 100-day Exponential Moving Averages (EMA), while the MACD indicator is slightly below the zero line.
It has also moved slightly above the key support at $96.5, its highest point in November 2022, and the upper side of the cup and handle pattern.
Therefore, the stock will likely have some volatility in the coming days. The key support and resistance levels to watch will be at $90 and $114.35.
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