Micron Technology shares fell Friday after the memory-chip maker badly missed estimates with its guidance for the current quarter. MU stock led other semiconductor stocks lower on the report.
The Boise, Idaho-based company late Thursday said it earned an adjusted $2.59 a share on sales of $8.64 billion in its fiscal third quarter ended June 2. Analysts polled by FactSet expected Micron earnings of $2.43 a share on sales of $8.64 billion. On a year-over-year basis, Micron earnings rose 38% while sales climbed 16%.
For the current quarter, Micron forecast adjusted earnings of $1.63 a share on sales of $7.2 billion. However, analysts were expecting earnings of $2.60 a share on sales of $9.15 billion in Micron's fiscal fourth quarter. In the year-earlier quarter, Micron earned $2.42 a share on sales of $8.27 billion.
"Recently, the industry demand environment has weakened, and we are taking action to moderate our supply growth in fiscal 2023," Chief Executive Sanjay Mehrotra said in a news release. "We are confident about the long-term secular demand for memory and storage and are well positioned to deliver strong cross-cycle financial performance."
MU Stock Has Subpar Composite Rating
Micron blamed its disappointing outlook on weakening smartphone and PC sales as well as demand and supply issues in China. The company also cited elevated inventory levels at its cloud computing customers.
On the stock market today, MU stock dropped 3% to close at 53.65. During the regular session Thursday, MU stock retreated 1.3% to 55.28.
The Philadelphia semiconductor index, known as SOX, fell 3.8% on Friday. The SOX contains the 30 largest semiconductor stocks traded in the U.S. Year to date, the SOX is down 37.7%.
MU stock ranks fifth out of 10 stocks in IBD's Computer-Data Storage industry group, according to IBD Stock Checkup. It has a subpar IBD Composite Rating of 46 out of 99.
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.
Analysts Cut Price Targets On MU Stock
At least 15 Wall Street analysts cut their price targets on MU stock after the company's earnings report. Of those analysts, 12 have buy ratings on Micron, two are neutral and one has a sell rating.
In recent weeks, Wall Street analysts have been tempering their expectations for semiconductor companies ahead of second-quarter earnings season.
"Memory is usually the first shoe to drop in a (semiconductor) down cycle," Robert Maire, president of consulting firm Semiconductor Advisors, said in a newsletter. "Earnings season could get very ugly indeed as more shoes could drop in the tech and chip sectors."
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