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Investors at Micron Technology Inc. were expecting a bit of sluggishness with the company's earnings report on Thursday, but they still received negative surprises that led analysts to wonder what the fund's bottom line would be. course of the company.
Micron
MU, -2.87%
Shares fell 2.9% on Friday after the company surpassed expectations with its fourth-quarter financial results, but released a disappointing, somewhat-awaited forecast after Samsung Electronics Co. Ltd.
005930, + 0.32%
reports a decline for large-scale memory purchases. The real surprises were Micron's revelations that President Donald Trump's tariffs on merchandise imported from China would reduce margins, and manufacturers' cuts due to a shortage of central processing units could join the calm of data centers.
"While the weakening of the DRAM demand of some hyperscale customers was well known, the negative consequences of the tariffs (weighing 50 to 100 basis points on gross margins) and the demand for DRAMs did not make it worse. were not, "CJ Muse analysis wrote on Friday
Many analysts have reduced their Micron goals before the report, and at least seven have done so after the publication of the numbers. Instinet analyst Romit Shah made the most dramatic change, reducing his price target to $ 100 to $ 65, and said he thought the management's forecast should have been lower.
Read more: Micron's forecast raises investor concerns
"We believe that guidance (short and medium term) should be seen as optimistic given the current environment where competitors are apparently planning a prolonged slowdown," wrote Shah.
The biggest analyst debate took place when Micron is expected to experience a "dip" in its indicators and price, which has already fallen by more than 20% over the last three months. Susquehanna Financial Group's Mehdi Hosseini titled its note to customers: "The Road To 'Trough' is starting now; Loop, it can take a few quarters.
Hosseini argued that Micron's earnings should stabilize by mid-year on a per-share basis, though he believes "it's hard to convince investors to accumulate until trust increases."
For the action, he referred to a sort of historical "game book" that suggested a point of inflection on stock prices six months before a break in the fundamentals.
On this basis, "maybe the period from November to December is the key period for the stock to begin discounting the May EPS trough," Hosseini said. He evaluates the stock at a price of 75 dollars.
Evercore's Muse, meanwhile, argued that an inflection of stock prices may not occur until the second quarter of 2019, "when the second derivative derived from the ASP DRAM will slow down." He remains optimistic about Micron. earnings per share for the 2019 calendar year, up from its previous estimate of $ 11 per share. The FactSet consensus forecasts earnings per share of $ 10.33 for the 2019 calendar.
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Karl Ackerman of Cowen & Co. is a little less optimistic. He considers that the average selling prices of the DRAM and NAND memories finally return to "historical standards", but notes that Micron is still very profitable. Ackerman also noted that Micron announced that it would stop providing a gross margin figure for its DRAM and NAND activities, information that is not common to other manufacturers.
"Although we do not welcome the premature end of the gross segment before a multitude of product transitions that should result in short-term costs, Micron is just catching up with its peers who have always avoided disclosing the profitability of the segments," wrote Ackerman. the stock to outperform with a price target of $ 62.
Of the 33 analysts monitored by FactSet, who cover Micron, 24 have purchase ratings and 9 hold ratings. The average price expected Friday was $ 70.40, 57% higher than current levels. Micron shares fell 25% in the last three months, while the S & P 500
SPX, -0.04%
gained 6.6% and the PHLX Semiconductor index
SOX, -0.33%
increased by 0.2%.
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