Micron Technology sinks even as Wall Street reacts favorably to earnings, guidance
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Micron Technology (NASDAQ:MU) shares erased
pre-market gains and fell nearly 5% on Thursday even as Wall Street reacted favorably to the memory chip maker, which reported a better-than-expected third-quarter.
Piper Sandler analyst Harsh Kumar upgraded Micron (MU) to neutral from underweight and said it looks as if the inventory correction is abating, as there are signs of volume and pricing improvements in the second-half of the year.
Kumar added that comments from Micron's (MU) management on its earnings call indicate that the revenue downturn looks to be behind the company as inventory levels for PCs and smartphones are getting close to normal.
Kumar also boosted his per-share price target to $70 from $45.
J.P. Morgan analyst Harlan Sur reiterated the firm's overweight rating and per-share price target of $75 on Micron (MU), pointing out the company has reached a "stabilization phase."
"We believe the team has moved past the trough of the down cycle and is now entering into a stabilization phase (pricing/margins) after a prolonged inventory destocking cycle," Sur wrote in an investment note.
"Overall for the [second-half] of the year, the team continues to see an improving trajectory on stronger bit shipments, stabilization in pricing/margins, and lower excess customer inventories."
Sur added that it's likely Micron's (MU) shares continue to "move in a positive direction" throughout 2023 as the market discounts a revenue, pricing and margin recovery next year.
For the period ending June 1, Micron (MU) lost an adjusted $1.43 per share as revenue came in at $3.75B. A consensus of analysts expected the company to lose $1.57 per share on $3.68B in revenue.
Looking to the fourth-quarter, Micron (MU) said it expects to lose between $1.12 and $1.26 per share on an adjusted basis, with revenue forecast to be between $3.7B and $4.1B.
A number of semiconductor companies traded higher on Thursday following the results, including Western Digital (WDC), Seagate Technology (STX) and AMD (AMD).
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