Micron’s (NASDAQ:MU) earnings are coming with the memory giant slated to announce its F4Q24 results on September 25 after the market closes.
With the print about to drop, it looks like some bulls on Wall Street have been getting cold feet. Fears of a DRAM oversupply have surfaced, leading to lowered expectations.
Citi analyst Christopher Danely is also amongst those expecting soft results and a disappointing outlook on account of “legacy DRAM weakness.”
Due to lower pricing, Danely is forecasting F4Q24 revenue and EPS of $7.50 billion (a 10% sequential increase) and $0.89, respectively, both falling short of the consensus estimates of $7.66 billion (up 12% QoQ) and $0.93.
Likewise for the guide; based on lower pricing and “excess inventory in the PC/handset food chains,” Danely sees Micron guiding for F1Q25 revenue and EPS of $8.0 billion (a 7% sequential increase) and $1.24, respectively, while the Street has $8.48 billion (an 11% QoQ uptick) and $1.39.
But while all that sounds as if Danely has now joined the Micron bear club, that is not actually the case. Even though Danely’s expectations are below consensus, he points out that “given a slew of downgrades,” F4Q results will be better than some are fearing.
The same goes for the F1Q forecast, with Danely saying buyside expectations have “declined substantially given downgrades and lower DRAM pricing and believe they are below our new forecast.”
Moreover, while it does seem to Danely that in the PC and handset end markets, there has been an inventory build in DRAM, he thinks that by the end of the year this should be over.
“More importantly,” Danely goes on to add, “we expect Micron’s revenue and gross margins to increase for the next several quarters.”
To this end, Danely gives Micron shares a Buy rating, although his price target is lowered from $175 to $150. Still, there remains a handsome upside of 69% from current levels. (To watch Danely’s track record, click here)
Danely’s objective now sits below the average price target on Wall Street; that figure comes in at $159.40 and implies the stock will gain ~80% in the months ahead. On the rating front, Micron claims a Strong Buy consensus rating, based on a mix of 25 Buy recommendations, 2 Holds and 1 Sell. (See MU stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
