Micron Technology Inc. shares continued their big 2019 rally Thursday after the maker of memory chips called a bottom for its financial performance after a string of sharp earnings declines.
Earnings per share dropped nearly 90% in the latest quarter as Micron MU, +3.71% continued to deal with an unfavorable supply-demand balance that’s pressured prices, but management said that the ongoing quarter is expected to be the “cyclical bottom.” Shares rallied some 3% in Thursday morning trading and are up 72% on the year.
If gains hold through the close, Micron’s stock will have risen for eight straight trading sessions, marking its longest winning streak since May 2017, when it rose for nine consecutive trading days, according to Dow Jones Market Research.
Some analysts were upbeat on the latest numbers, with Evercore ISI’s C.J. Muse arguing that they help justify his recommendation of Micron shares as a top pick. “Looking ahead, we continue to view Micron as a go-to name to own in 2020 supported by positive EPS revisions on expected supply/demand tightness in DRAM into 2HCY20 that we believe supports EPS tracking to at least $7 into CY21,” he wrote.
Muse increased his target price to $75 from $60 while continuing to rate the stock at outperform.
Opinion: Micron calls a bottom, but doesn’t say what’s on the other side
Deutsche Bank’s Sidney Ho isn’t sweating the challenges that could loom ahead for Micron. “While Micron is still facing multiple headwinds, including still not being able to ship some products to Huawei and under-utilization charges, we believe the improving market outlook in both DRAM and NAND should more than offset these barriers,” he wrote.
Ho has a buy rating and $65 target on Micron’s stock, up from $55 before the report.
Others were less cheerful on Micron’s prospects. “While the premise of a bottom is still a management prediction and not yet a fact, it’s remarkable that the stock is just a few dollars short of an all-time high,” Raymond James analyst Chris Caso said. But he remains on the sidelines when it comes to Micron’s stock, writing that “there’s a lot of wood to chip” for Micron’s gross margins to recover to 40% and for the company to sport a roughly 10% compound annual growth rate over the next two years, which he said the current stock price seems to reflect.
Caso rates the stock at market perform.
Don’t miss: Broadcom stock declines as wireless chip stance confuses some analysts
Karl Ackerman of Cowen & Co. wrote that Micron’s latest report offered “several bullish data points,” including the projection for a February-quarter bottom and signs that order momentum is inflecting. “However, near-term, we struggle today to see the cyclical ‘whip’ in earnings or [free-cash flow] that would justify this stock to re-rate from here,” he wrote.
Ackerman kept his market perform rating on the stock while bumping his target price up to $50 from $46.
Baird’s Tristan Gerra remained bearish on the stock, writing that while the memory trough looks to be earlier and shallower than he initially projected, Micron’s stock price already bakes in a “full-fledged memory-cycle recovery.” At the same time, he’s worried about the “seasonally weak” first half of the calendar year.
“China has been over-ordering, likely impacting bit growth for F2020; inventory levels continue to decline and under-utilization charges will be ongoing while macro uncertainties remain and management expects a slowdown in NAND flash demand next year,” wrote Gerra, who has an underperform rating on the stock but boosted his target to $45 from $30 after the report.
Joseph Moore of Morgan Stanley commented that the last time Micron’s shares were at this level, the company was sporting EPS of $3.50; consensus estimates call for 36 cents in EPS in the February quarter. “Conviction in the sustainability needs to be very high to argue for an overweight position, and we do lack that conviction,” wrote Moore, who rates Micron at equal-weight with a $56 target.
The stock is up 17% in the past month, as the S&P 500 SPX, +0.31% has gained 2.5%.
"Big" - Google News
December 19, 2019 at 11:17PM
https://ift.tt/2Mbx5rL
Micron’s upbeat tone on recovery sparks debate following stock’s big rally - MarketWatch
"Big" - Google News
https://ift.tt/2OUhyOE
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
No comments:
Post a Comment