Memory-chip maker Micron Technology isn't out of the woods amid a cyclical industry downturn. MU stock fell Thursday after the company reported fiscal fourth-quarter profit and revenue that topped estimates while its outlook came in mixed.
The memory chip maker reported after the market close on Wednesday. Micron earnings for the period ended Aug. 31 fell 26% from a year earlier while revenue tumbled 40%. Results topped views amid lowered expectations.
The Boise, Idaho-based company said it lost an adjusted $1.07 per share on sales of $4.01 billion for the quarter. Analysts polled by FactSet had expected Micron to lose $1.15 a share on sales of $3.945 billion. In the year-earlier period, Micron earned $1.45 a share on sales of $6.44 billion.
For the current quarter ending in November, Micron predicted an adjusted loss of $1.07 per share, the same as the August quarter, on revenue of $4.4 billion. Wall Street analysts called for a loss of 88 cents a share on sales of $4.24 billion, up 4% from a year earlier.
"Pricing is starting to inflect as aggressive production cuts across the industry are helping improve demand supply balance," Raymond James analyst Srini Pajjuri said in a note to clients. He added: "We believe the combination of muted supply growth, normalizing inventories, and stable demand will set the stage for multi-quarter cyclical upturn starting in the fourth quarter of calendar 2023."
MU Stock: Outlook Mixed
On the stock market today, MU stock dropped 4.4% to close at 65.20. Heading into the Micron earnings report, MU stock had advanced 36% in 2023 amid buzz around artificial intelligence stocks.
Artificial intelligence workloads could increase demand for Nand chips built into hard disk drives in data centers.
"The earliest we see Micron achieving pro-forma EPS break-even is a year from now (Q4, fiscal 2024), with free cash flow improvement lagging," Bank of America analyst Vivek Arya said in a note to clients.
He added: "There is excitement around data center and AI, but too small to matter for MU in the near- to medium-term. And, it's insufficient to offset sluggish phone/PC sales as well as MU's late start in the high-bandwidth memory market."
Micron makes two main types of memory chips: dynamic random-access memory, or DRAM, and Nand. DRAM chips act as the main memory in PCs, servers and other devices. Nand flash retains memory when power is turned off and provides longer-term data storage.
Micron Stock Technical Ratings
Analysts expect memory chip pricing to firm up in fiscal 2024. But the Chinese government plans to ban Micron memory chips from its computer network infrastructure.
MU stock holds a IBD Composite Rating of 66 out of a best-possible 99, according to IBD Stock Check-up.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
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