The newest earnings report for Micron Expertise Inc. led to huge stock write-downs, the corporate’s greatest quarterly loss in historical past and lingering questions on when the corporate would backside out.
Micron MU shares,
have been towards Wednesday’s underperformance, rising 5% in morning buying and selling because the reminiscence chip firm wrote down greater than $1.4 billion in inventory, however confirmed some developments have been enhancing.
Extra particulars: Micron experiences greatest loss ever, however shares rise as executives say stock woes have peaked
The newest numbers and motion sparked debate amongst Wall Avenue analysts, with some viewing the write-down as a painful however needed step whereas welcoming the corporate’s steps to scale back manufacturing.
“Regardless of the noise round one-time costs, the outcomes have been largely according to expectations,” TD Cowen analyst Krish Sankar wrote. “Additional manufacturing cuts are optimistic for the reminiscence trade: [Micron] appears to be main the way in which in cuts.”
Evercore ISI’s CJ Muse titled his be aware to purchasers, “It is So Dangerous … It is Good (Half 2) – Child Steps to the Backside,” harkening again to a be aware he wrote in December.
“Micron made the announcement final night time and now we have to say there weren’t too many surprises,” he wrote. “Sure, estimates are nicely under consensus, however consumers have been nicely conscious of that on condition that we’re going by the worst recession in reminiscence in 13 years. As for the excellent news, administration has tweaked it [capital expenditures] cut back once more … cut back use once more … and in [February quarter] wrote down stock,” though administration highlighted the $500 million in further write-downs anticipated within the Might quarter.
Opinion: Micron simply launched an objectively horrible earnings report. Why shares don’t fall?
Citi Analysis analyst Christopher Daney famous that the corporate “continues to scale back capex and utilization to make sure DRAM manufacturing falls under demand in 2023, which we imagine will create a backside for the DRAM market.”
UBS’s Timothy Arcuri mentioned Micron’s newest outcomes have been “directionally according to what we predict most buyers need to hear” as “shares have already bottomed however will proceed to rise”, whereas the February quarter was the underside for knowledge heart enterprise and PC and smartphone developments might change within the second half of the 12 months.
“One can argue in regards to the tempo of the restoration and the valuation, nevertheless it’s simply going to be arduous to combat it when the beats are going up, given the traditionally sturdy correlation,” Arcuri continued.
All 4 of those analysts have bullish rankings on Micron inventory.
Others have been extra skeptical, together with Piper Sandler’s Harsh Kumar, who echoed the underweight score.
“In our opinion, [Micron] continues to endure from overstocking at the moment, and whereas there seems to be a glimmer of hope within the close to future, we stay cautious,” he wrote.
Kumar added that whereas “small development might proceed to push upward, pricing will proceed to be extremely contested within the close to time period.”
Byrd’s Tristan Guerra was sidelined after the outcomes.
“Micron is buying and selling at a 40% premium to tangible e-book worth, whereas the percentages of a recession are rising and inventories (each provide and demand) stay nicely above regular,” he wrote. “Whereas aggressive manufacturing cuts will probably push inventories larger relative to e-book worth than in earlier cycles, we keep our impartial score for now.”
Micron shares are up 25% over the previous three months, whereas the S&P 500 SPX,
added 4%.
