Micron Disappointing Outlook 'Shouldn't Be Surprise': Analyst

A Raymond James analyst says disappointing guidance isn't likely to be a "significant surprise to investors."
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Micron Technology  (MU) - Get Report may have offered disappointing guidance, but analysts say the semiconductor maker will recover.

Shares of the Boise, Idaho, company at last check were down 3.7% to $48.83.

On Tuesday Micron reported non-GAAP fiscal-fourth-quarter profit of $1.23 billion, or $1.08 a share, on revenue of $6.06 billion.

Analysts surveyed by FactSet had called for net income of $1.1 billion, or 98 cents a share, on sales of $5.9 billion, based on a FactSet survey of 28 analysts. 

Micron offered first-quarter guidance for non-GAAP earnings between $800 million and $850 million, or 40 cents to 54 cents a share, on revenue between $5 billion and $5.4 billion. 

Analysts were forecasting adjusted net income of $818.7 million, or 69 cents a share, on sales of $5.3 billion.

Raymond James analyst Chris Caso wrote in a note to clients that "November-quarter sales are guided to $5.2 billion, down 14% [sequentially] but roughly consistent with current consensus."

"MU guided below consensus for November, but given the company’s messaging at investor conferences through the quarter, we don’t think it’s likely to be a significant surprise to investors," Caso said. 

"Near-term weakness is a function of customer inventory, Huawei restrictions, and some elements of covid-related weakness, all of which are transitory by nature."

China's Huawei Technologies has been blacklisted from doing business with American companies amid ongoing tension between the U.S. and Chinese governments.

The analyst, who reiterated his strong buy and $65 price target, said that "management expects a stronger recovery in second-half 2021 as demand normalizes."

Deutsche Bank analyst Sidney Ho raised his price target on Micron to $51 from $48 and keeps a hold rating on the shares.

Ho said he was encouraged by the company's outlook on the DRAM market. This suggests the bottom of the DRAM cycle "may be near," he said

Wedbush analyst Matt Bryson remains on the sidelines with Micron's stock down post-earnings, due predominantly to disappointing margin guidance, according to the Fly.

While Bryson remains more constructive on memory conditions in 2021, he continues to look for either a better entry point or signs that conditions are turning to get more constructive on Micron. 

Bryson has a neutral rating and a $55 price target on the shares

On Monday Citi analyst Christopher Danely opened a negative catalyst watch on shares of Micron Technology.