| | | The powerful negativity on Micron continues. This piece from Barrons notes the strong move up by Micron and then quotes two analysts who continue to be negative, one of whom (Delaney) has been consistently wrong about the stock, lagging its moves up and always having to lift his estimates in the face of reality. I don't know anything about the Piper Jaffrey analyst's record.
Micron Stock Is Rising, but a Goldman Analyst Says It’s Not a Buy
By Tae Kim
March 21, 2019 10:11 a.m. ET
Micron Technology stock (ticker: MU) is rallying after it reported better-than-expected fiscal-second-quarter earnings. But some Wall Street analysts are still not optimistic about the chip maker due to rising inventories and memory price declines.
Micron is a leader in the DRAM and NAND memory-semiconductor market. DRAM refers to dynamic random-access memory, used in desktop computers and servers. NAND is flash memory, which is used in smartphones and solid-state hard drives.
The back story. On Wednesday, the chip maker posted adjusted earnings per share of $1.71 for its fiscal second quarter, above the FactSet consensus EPS estimate for $1.60.But Micron disappointed with guidance. The company forecasted an adjusted EPS range of 75 cents to 95 cents for its third fiscal quarter, versus the Factset consensus EPS estimate for $1.18. Micron also said sales for the quarter will be $4.6 billion to $5 billion, compared with the $5.3 billion average forecast.
Even though the company said on its conference call it has low visibility on its business, investors seemed to take solace in its prediction data-center demand will improve later this year.
Micron stock was up 5.1% to $42.18 on Thursday after the results.
What’s new. Goldman Sachs analyst Mark Delaney reiterated his Neutral rating for Micron stock, predicting a difficult memory-pricing environment over the short term.
“We continue to see several fundamental risks for the near to intermediate term [for Micron],” he wrote on Thursday. “Micron’s inventory reached a record high per our model … Competitors have also increased inventory, and we believe that this could continue to weigh on industry pricing in [the second half of calendar 2019].”
Delaney noted Micron shares historically have correlated with memory pricing. He also noted that memory downturns typically last six quarters, versus the two quarters in the current down-cycle.
In similar fashion, Piper Jaffray analyst Harsh Kumar on Wednesday reaffirmed his Neutral rating for the chip maker.
“We continue to be on the sidelines. Overall, we see sustained pressure on [average selling prices] for DRAM and NAND, which we expect to continue through the back half of the year,” Kumar wrote.Looking ahead. Goldman’s Delaney raised his price target for Micron to $42 from $38, while Piper Jaffray’s Kumar increased its forecast to $40 from $36.
Write to Tae Kim at tae.kim@barrons.com |
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