Micron Technology (NASDAQ: MU) recently issued a financial outlook that fell short of Wall Street’s expectations, causing significant shifts in its stock performance. The company projected its fiscal second-quarter revenue to be around $7.9 billion, which is below the anticipated $8.93 billion as per analyst consensus.
Additionally, Micron forecasted diluted earnings per share (EPS) between $1.16 and $1.36, again trailing behind market predictions. Despite these disappointing projections, CEO Sanjay Mehrotra expressed optimism, noting that while consumer markets may face challenges in the short term, they are expected to recover in the latter half of the fiscal year.
Micron Reports Notable Growth in First Quarter, Outlook Disappoints
Micron’s first-quarter results showcased notable achievements, with a reported profit of $1.87 billion, or $1.67 per share. This marks a significant recovery from the previous year’s loss of $1.23 billion, or $1.12 per share. The company’s revenue also saw an impressive 84% increase, reaching a record $8.71 billion. Although this figure was slightly below analysts’ estimates, it exceeded the midpoint of the company’s guidance. These results highlight Micron’s robust performance in the datacenter segment, which continues to drive growth amid fluctuating market conditions.
Following the announcement of its financial outlook, Micron’s stock experienced a sharp decline, dropping over 13% in extended trading. Despite this setback, the stock had been performing well throughout 2024, with an overall increase of nearly 22% up to the day before the announcement.
Analysts attributed the stock’s decline to the company’s revenue and EPS forecasts falling short of expectations, which dampened investor sentiment. However, the long-term outlook remains positive, as reflected in the strong buy recommendation and target price projections.
MU Stock Brief
Micron’s stock price has seen considerable fluctuations in recent days. On December 19, 2024, the stock opened at $90.13 and was trading at $87.75 by late morning. The day’s trading range saw a low of $84.75 and a high of $91.00. This volatility follows a series of price adjustments earlier in the week, with the stock closing at $108.26 on December 16 and $103.90 on December 18.
Despite the recent dip, Micron’s stock maintains a strong buy recommendation, with a mean target price of $136.13. Analysts have set a high target of $250.00 and a low of $70.00, reflecting varied expectations based on future market conditions.
The company’s financial metrics, including a market cap of $97.76 billion and a price-to-book ratio of 2.16, indicate a solid foundation for future growth. With a forward P/E ratio of 6.84 and a forward EPS of $12.87, Micron is positioned for potential recovery and expansion, contingent upon market dynamics and consumer demand recovery.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
About the author
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
