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Micron (MU) to Report Q4 Earnings: What's in the Cards?

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Micron Technology (MU - Free Report) is set to report fourth-quarter fiscal 2020 results on Sep 29.

For the quarter, the company expects earnings of $1.05 per share (+/- 10 cents). The Zacks Consensus Estimate for earnings stands at $1 per share, unchanged over the past 30 days and indicating 78.6% growth from the figure reported in the year-ago quarter.

Meanwhile, Micron expects revenues to be in the $5.75-$6.25 billion range. The consensus mark for revenues is currently pegged at $5.91 billion, suggesting an increase of 21.4% from the year-ago quarter’s reported figure.

The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 10.1%.

Micron Technology, Inc. Price and EPS Surprise


Micron Technology, Inc. Price and EPS Surprise

Micron Technology, Inc. price-eps-surprise | Micron Technology, Inc. Quote

Let’s see how things are shaping up for this announcement.

Factors to Watch Out For

Micron’s fourth-quarter results are expected to reflect bleak memory-chip demand as customers have been adjusting inventories in response to the economic recession caused by the coronavirus outbreak.

Further, overall macro-economic uncertainty in the semiconductor space is expected to have cast a pall over Micron’s top-line growth prospects in the to-be-reported quarter.

The coronavirus outbreak dealt a heavy blow on the cyclical recovery in DRAM and NAND, as acknowledged by Micron in its fiscal third-quarter conference call. Segments like automotive and smartphones have suffered significantly, which doesn’t bode well for the company. Notably, supply-chain disruption has significantly hurt the automotive sector.

Additionally, Micron’s heavy dependence on China is a headwind due to the ongoing tit-for-tat trade war between the United States and China. Restrictions on export to Huawei are expected to have hurt top-line growth of this Zacks Rank #5 (Strong Sell) company.

Moreover, higher mix of lower-margin NAND, coupled with low memory prices and minimal decline in manufacturing cost, is likely to have strained margins.

However, per IDC data second-quarter 2020 (April-June) server sales were strong, which is expected to have benefited Micron. Notably, Hewlett Packard Enterprises (HPE - Free Report) and Dell were ranked as the top vendors by IDC.   

Micron is expected to have benefited from strong demand for cloud storage. Coronavirus-led lockdowns have enhanced the usage of online services globally. Therefore, data-center operators have been boosting their cloud-storage capacities to accommodate the growing demand for cloud services, thereby aiding Micron.

Notably, Micron has started sampling its higher-frequency DDR4 modules for Intel’s (INTC - Free Report) Ice Lake server platform.

Further, strong demand for PCs driven by work-from-home and online-learning wave has been beneficial for Micron. Per IDC data, second quarter (April-June) PC shipments grew 11.2% to 72.3 million. HP (HPQ - Free Report) was the top vendor, trailed by Lenovo, per IDC.

Markedly, in fiscal third-quarter, Micron’s DRAM bit shipments expanded significantly on a sequential basis, driven by rapid work-from-home infrastructure deployment, as well as increased 5G deployment, particularly in Asia. The momentum is expected to have continued in the to-be-reported quarter.

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