Analysts Continue to Lower Estimates and Price Targets for Micron (MU) Heading Into FQ4 Earnings

September 24, 2021 7:19 AM EDT
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Price: $67.26 -0.62%

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At least three Wall Street analysts have slashed their price targets on Micron Technology (NASDAQ: MU) as investors prepare for the company to report FQ4 earnings next week (Sep 28).

Prior to today, analysts at three research firms lowered their price targets on Micron since the end of August. Today, they have been joined by their colleagues at Mizuho, JPMorgan, and KeyBanc.

JPMorgan analyst Harian Sur lowered the price target to $100.00 per share from the prior $140.00 to reflect the lower estimates on near-term pricing normalization on supply chain challenges. Sur expects the company to report sales and EPS in line with its prior guidance.

“We see near-term DRAM pricing softness going into C4Q as supply-constrained PC shipment weakness (driving softer DRAM pricing) offsets strength in server and smartphones, which should drive a conservative tone/guidance for MU’s Nov-Q outlook. We see DRAM pricing softness continuing into the 1H of CY22 as weaker seasonality sets in for most end-markets followed by a positive inflection starting mid-CY22 (in-line w/ our recent Global Memory market update) as overall demand inflects higher amidst a disciplined supply-side environment. We believe that memory suppliers will use CQ4/1H22 as an opportunity to build-back DRAM inventories (currently below target ranges) and this will further limit near-term pricing downside,” Sur said in a client note.

Although KeyBanc analyst John Vinh expects the near-term downturn to be short-lived, he still lowered the price target to $110.00 from the prior $120.00.

“We expect MU to report a beat for F4Q21 (August) results driven by robust cloud demand trends and healthy DRAM/NAND pricing trends, while we expect lowered F1Q22 (November) guidance, given excess customer inventories in smartphones and PCs (given component shortages) and a pause in cloud memory procurement and DRAM price declines. While we are trimming our estimates and PT to $110, we expect this upcoming downturn to be short-lived given lean producer inventories and stable end-demand trends in PC, data center, and mobile,” Vinh said in a client note.

Contrary to KeyBanc and JPMorgan, Rosenblatt analyst Hans Mosesmann reiterated a Buy rating and a top pick view on MU ahead of the earnings report. The price target remains a Street-high of $165.00 per share.

“We expect sales and non-GAAP EPS to be above both our/consensus estimates of $8.20 billion/$8.22 billion and $2.30/$2.33, respectively. We see the August quarter being driven by strength across the board, including in data center, mobile, PC, and auto, as well as strong pricing trends for both DRAM and NAND,” Mosesmann wrote in a note.

Micron stock price is down 0.8% in pre-open Friday and unchanged YTD.

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