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Bull of the Day: Micron Technology (MU)

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Micron Technology (MU - Free Report) , a Zacks Rank #1 (Strong Buy), is one of the world's leading providers of advanced semiconductor solutions. Through its worldwide operations, Micron manufactures and markets DRAMs, NAND flash memory, CMOS image sensors, other semiconductor components, and memory modules for use in leading-edge computing, consumer, networking, and mobile products.

Recent Earnings Data

The company reported Q1 18 earnings results on December 19th where they beat both top and bottom line expectations for the third consecutive quarter.  Revenues were up +71% YoY while earnings improved by +760% due to sustained high demand, and improved memory pricing.  Further, MU saw gross margins increase to 55.1%, up from 50.7% in the previous quarter.  To add to this positive news, management commented that its Taiwan facility (back end test and assembly) would produce meaningful output by the end of FY 18.  This will help the company meet the high demand for its products, and increase overall revenues.  Most importantly, management boosted revenue guidance for Q2 18 to a range between $6.8-7.2 billion, well above the consensus estimate of $6.2 billion.  

Management’s Take

According to Sanjay Mehrotra, President and CEO, “Micron's strong results were driven by double-digit sequential revenue growth in mobile, server and SSD applications, with expanded gross margins and improved profitability.  We are making solid progress on our strategic priorities to drive cost competitiveness, deploy high value solutions and strengthen our balance sheet.  We believe these actions will position Micron to benefit from the broad demand trends ahead of us."

Price and Earnings Consensus Graph

As you can see in the table below, Micron’s stock price and future earnings estimates have been trending upwards since the middle of 2016 as the demand for DRAM, and NAND continues to grow.

Micron Technology, Inc. Price and Consensus

Micron Technology, Inc. Price and Consensus | Micron Technology, Inc. Quote

Increasing Earnings Estimates

Due to the impressive earnings report, and subsequent increase in revenue guidance, earnings estimates have been positively revised for Q2 18, Q3 18, FY 18, and FY 19; Q2 18 rose from $1.95 to $2.57, Q3 18 improved from $1.79 to $2.50, FY 18 jumped up from $7.66 to $9.83, and FY 19 was elevated from $5.95 to $8.51.

Micron Technology reports Q2 18 results on March 22nd.

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