Micron (MU), a manufacturer of microchips, along with other memory and storage products, is set to release fiscal fourth-quarter 2021 earnings on September 28.
Despite the fact that chip demand remains high, Micron stock has been dragged down by the decline in DRAM (dynamic random-access memory) pricing. As a result, the stock has dropped roughly 13% in the last six months.
However, the company’s improving data center demand patterns and rising NAND sales make it a smart pick. Therefore, I am optimistic about the stock. (See Micron Dividend Date and History on TipRanks)
Strong results might improve Micron’s stock price, so let’s take a look at what analysts are predicting.
Q4 Expectations
Analysts on average expect Micron to post earnings of $2.33 per share and revenues of $8.19 billion in fiscal Q4.
Meanwhile, the Earnings Whisper number, or the Street’s unofficial view on earnings, stands at $2.21 per share.
Micron’s Prior Quarter Snapshot
Micron announced a solid fiscal third quarter, above consensus forecasts, and showed a significant increase year-over-year.
Revenues of $7.4 billion grew 36% year-over-year and were higher than Wall Street’s prediction of $7.23 billion.
Meanwhile, adjusted earnings came in at $1.88 per share, which was higher than the $1.71 consensus estimate. Further, earnings increased by 129.3% year-over-year, marking the company’s largest sequential earnings increase in the company’s history.
A Few Points to Watch
MU benefits from economies of scale as well as a large network of loyal customers. Furthermore, owing to the expansion of artificial intelligence and 5G technologies, as well as the global recovery, the memory and storage industry is flourishing.
These factors should boost MU’s performance in the following quarter.
It’s also worth mentioning that Micron has a strong financial sheet, with $9.82 billion in cash and equivalents at the end of the fiscal third quarter. Micron then shocked investors by initiating a quarterly dividend in August.
In response to the dividend announcement, Micron CEO Sanjay Mehrotra said, “Initiating a common stock dividend reflects our confidence in Micron’s future and our commitment to creating compelling value for shareholders.”
The information above suggests that MU is well-positioned to not just weather any industry-related slump, but also to respond advantageously to it.
Analysts’ Recommendations
Ahead of the Q4 earnings release, Timothy Arcuri of UBS maintained a Buy rating on the stock but decreased the price target to $95.00 from $100.00. This implies 28.4% upside potential to current levels.
Micron stock commands a Strong Buy consensus rating, based on 16 Buys and 5 Holds.
As for price targets, the average MU price target of $109.81 implies 48.5% upside potential from the current levels.
Disclosure: On the date of publication, Shalu Saraf had no position in any of the companies discussed in this article.
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