Micron Stock Is Rallying. Earnings and the Outlook Were Strong.


https://www.barrons.com/articles/micron-stock-earnings-51648505233

Memory-chip maker Micron Technology posted better-than-expected results for its latest quarter on Tuesday. The firm also provided an optimistic outlook that exceeded Wall Street’s estimates.

Micron (ticker: MU) shares were up nearly 4% in after hours trading. That follows a 2.7% gain during Tuesday’s regular session, in which shares closed at $82.05.

For its fiscal second quarter ended March 3, Micron reported revenue of $7.8 billion, up 25% from a year ago and above the company’s target of $7.5 billion. Adjusted profits were $2.14 a share, up from 98 cents a year ago and above the company’s forecast for $1.95.

Under generally accepted accounting principles, the company earned $2 a share, up from 53 cents a year earlier. Non-GAAP gross margin in the quarter expanded to 47.8%, from 47% in the fiscal first quarter, and 32.9% a year ago. 

“Micron’s excellent second quarter results exceeded the high end of our guidance for both revenue and margin, reflecting our strong execution,” Micron CEO Sanjay Mehrotra said in a statement. “We’re leading the industry in technology across DRAM and NAND, and our product portfolio momentum is accelerating.”

In the quarter, DRAM revenue was up 29% from a year ago, and represented 73% of total revenue. NAND revenue was up 19%. The company said average selling prices in the quarter were down in the mid-single-digit percentage from the first quarter for DRAM, but up in the mid-single-digits for NAND.

For the fiscal third quarter, Micron is projecting revenue of $8.7 billion, give or take $200 million, with a gross margin of 48%, plus or minus a point, and non-GAAP profits of $2.46 a share, give or take a dime. The Wall Street consensus had called for $8.1 billion in revenue and non-GAAP profits of $2.24 a share. The company said it expects margin improvement in both NAND and DRAM chips in the quarter.

In slides prepared for the company’s earnings call this afternoon, Micron said that it does not expect any negative impact on production tied to the Russia-Ukraine war, but added that it does expect an increased in costs “as we secure supply of certain raw materials that could be at risk.”

The company said that revenue related to data-center applications was up more than 60% in the quarter, while PC demand improved, as enterprise-PC sales increased. Micron said it had record revenue in parts for the automotive sector, while industrial revenue was up about 60%.

Micron added that it is “on track to deliver record revenue with solid profitability” for the fiscal year, with “strong bit shipment growth” in the fiscal second half. Micron projects calendar 2022 bit growth in the mid-to-high teens for DRAM with about 30% bit growth demand for NAND memory.

Micron also noted it repurchased 4.8 million shares in the quarter for about $408 million.


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