Source: Wall Street See
Author: Bu Shuqing
Analysts expect that Micron's third quarter revenue will increase by 76.8% year-on-year, successfully achieving profitability, and fourth quarter guidance exceeding market expectations. At the same time, the market also pays attention to whether Micron is firmly bullish on chip prices and whether capacity expansion is delayed.
Against the backdrop of the continuous heating up of the semiconductor industry, Micron Technology is set to release its third-quarter fiscal year 2024 earnings report on Wednesday after the US stock market closes. Wall Street analysts are generally optimistic and expect Micron to produce an impressive report. Before the earnings release, they have also raised Micron's target price overnight.
According to media compiled analyst estimates, Micron's third-quarter revenue is expected to reach $6.63 billion, an increase of 76.8% from the same period last year's $3.75 billion. It is noteworthy that Micron has exceeded analysts' revenue estimates for four consecutive quarters, and has surpassed expectations for 7 out of 10 quarters. This time, will Micron continue to surprise Wall Street?
Analysts also predict that Micron will turn losses into profits in the third quarter and may achieve a net income of $399 million, with an EPS of $0.30, compared with a loss of $1.9 billion and an EPS of -1.73 in the same period last year.
Supported by AI, Q4 guidance may exceed market expectations.
The AI business is undoubtedly one of the biggest focuses of this financial report.
As an important partner of AI chip manufacturer NVIDIA, Micron provides high-bandwidth memory chips for its AI graphics processing units (GPU). Investors will closely monitor Micron's progress in the AI sector, especially the growth of its high-bandwidth memory (HBM) business.
Morgan Stanley analysts expect that the HBM business will be an important support for Micron's performance guidance.
Given the soaring demand for AI chips, analysts from Morgan Stanley, Citigroup and other investment banks expect that Micron is likely to provide Q4 guidance that exceeds market expectations.
For example, Citigroup analysts expect Micron's Q4 revenue guidance to reach $8 billion, a significant increase from Q3.
Strong guidance not only reflects the management's confidence in future business growth, but may also become an important factor driving the stock price up.
Previously, Micron CEO Sanjay Mehrota said after the second-quarter earnings release:
"Our outstanding product portfolio enables us to deliver strong results in the second half of fiscal year 2024. We believe that Micron is one of the largest beneficiaries in the semiconductor industry and will benefit from the long-term opportunities brought by AI."
Rosenblatt analyst Hans Mosesmann believes that the demand for AI applications will continue to grow in Micron's third quarter, and multiple positive trends will continue until 2026 and 2027.
Is Micron firmly bullish on chip prices?
In addition to demand, the market is also concerned about Micron's views on chip price trends.
Morgan Stanley analysts expect Micron to reiterate its view that DRAM and NAND storage chip prices will rise between 2024 and 2025. If Micron can provide more details and evidence for this prediction, it will undoubtedly boost investor confidence.
Wedbush analyst Matt Bryson believes that the increase in average selling price in the third quarter may be a key point to watch.
Bryson predicts that Micron's third-quarter performance will exceed analyst expectations and raise its guidance. Micron's average selling price, revenue, profit margin, and EPS are all trending upwards.
Finally, investors are also concerned about Micron's latest progress in capacity expansion.
Finally, investors are also paying attention to the latest developments in Micron's capacity expansion.
Earlier reports indicated that Micron's new plant project in New York state faced construction delays, and the start time may be delayed until 2025.
This project is of significant importance to Micron's increase in domestic chip production, so the company may provide an explanation at the earnings conference.
Analysts have raised their target price.
Benefiting from the AI investment boom, Micron's stock price has performed strongly this year, rising more than 60% and closing at $141.12 as of Tuesday this week.
It is worth mentioning that before Wednesday's earnings report, many institutional investors raised Micron's target price:
Wedbush holds an "outperform" rating and recently raised its target price from $130 to $170;
Rosenblatt holds a "buy" rating with a target price of $225;
Morgan Stanley holds a "neutral" rating, raising its target price from $130 to $140;
Citigroup holds a "buy" rating, raising its target price from $150 to $175;
Baird holds an "outperform" rating, raising its target price from $150 to $172;
Raymond James holds an "outperform" rating, raising its target price from $130 to $160;
Wolfe Research holds an "outperform" rating, raising its target price from $150 to $200.
This reflects the market's optimistic expectations for the company's future prospects to some extent. However, this also means that if earnings fall short of expectations, the stock price may face downside risks.
Editor/Jeffy