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Reminiscence-chip large
Micron Expertise
studies earnings this afternoon for its fiscal second quarter led to February amid appreciable crosswinds for the corporate and the reminiscence sector particularly.
Just a few weeks in the past, pricing on NAND reminiscence chips spiked after an outage at a manufacturing facility in Japan operated by a three way partnership owned by
Western Digital
(WDC) and Kioxia. However there are additionally some rising considerations about softening demand from each the non-public pc and smartphone sectors, which may stress pricing on DRAM chips. And there are lingering considerations in regards to the provide chain tied to each the persevering with Covid-19 pandemic–China this week introduced a brand new lockdown in Shanghai–and the struggle in Ukraine.
For the quarter, Micron’s (ticker: MU) steerage requires income of $7.5 billion, with non-GAAP earnings of $1.95 a share. Avenue consensus is barely increased at $7.53 billion and $1.98 a share. Avenue estimates name for $1.9 billion in NAND gross sales and $5.5 billion in DRAM gross sales within the quarter.
For the Might quarter, Avenue consensus as tracked by FactSet requires income of $8.1 billion and earnings of $2.24 a share on a non-GAAP foundation.
Citi analyst Chrstopher Danely writes in a analysis be aware previewing the quarter that he expects February quarter outcomes in keeping with steerage, however sees potential that the Might outlook may high Avenue estimates. Danely, who has a Purchase score and $120 goal worth on the inventory, writes that DRAM pricing is prone to rise within the 2022 second half, pushed by low provide and recovering demand. He additionally notes that each Micron and Western Digital raised NAND costs by about 10% in late February, with spot pricing up about 3%.
Wedbush analyst Matt Bryson, who raised his score on Micron shares to Outperform from Impartial when information of the manufacturing points on the Western/Kioxia three way partnership emerged, says that reminiscence market situations haven’t been fairly as strong as he had anticipated. “Softer PC manufacturing, handset construct cuts, and fewer strong retail situations have lowered the seemingly magnitude of the upwards swing we anticipated in NAND pricing and equally could forestall DRAM from realizing extra pronounced upticks,” he writes. However Bryson provides that he nonetheless sees the inventory as undervalued given anticipated earnings efficiency.
Micron shares are down about 16% for the 12 months up to now.
Write to Eric J. Savitz at eric.savitz@barrons.com
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