Micron: disappointing forecasts weigh on the stock

(CercleFinance.com) - Micron Technology last night reported results in line with expectations for its first quarter to the end of November, but the memory chip maker's stock fell sharply on Thursday on the New York Stock Exchange following forecasts deemed disappointing.


On Thursday, the American group reported higher quarterly sales and earnings, driven by strong demand for its components for data centers, a business that now accounts for more than half of its activity.

Net income came to $1.87 billion, or $1.67 per share, for the quarter ended November 28, the first of its 2024/2025 fiscal year, compared with a loss of over $1.2 billion a year earlier.

Excluding non-recurring items (non-GAAP), earnings per share came to $1.79, three cents higher than market expectations.

Sales rebounded to $8.7 billion, compared with $4.7 billion for the same period last year, in line with market expectations.

The Boise, Idaho-based group nevertheless announced much lower-than-expected targets for its second quarter, citing weakness in its consumer goods markets.

Its EPS target of around $1.43 thus compares very unfavorably with the consensus, which was targeting $1.92, as does its sales forecast of around $7.9 billion, far from the market's average estimate of $9 billion.

For many analysts, these targets are "clearly disappointing" at a time when chipmakers are among the prime beneficiaries of the artificial intelligence "boom".

BofA's teams have therefore downgraded their recommendation on the stock from 'buy' to 'neutral', with a reduced price target of $110, believing that strength in data centers and high-bandwidth memory (HBM) is likely to be more than offset by the PC and smartphone markets, putting margins under pressure.

For UBS analysts, Micron's publication is certainly not a Christmas present, but the correction that has hit the stock today could, in their view, represent a buying opportunity.

By plunging over 17% today, Micron shares have wiped out almost all their annual gains to post a near-zero balance sheet for the full year.

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