Micron & Other Chip Bigwigs To Focus On Ahead Of Earnings
Zacks Investment Research | Sep 25, 2019 10:09PM ET
Micron Technology, Inc. (NASDAQ:MU) is set to report fiscal fourth-quarter earnings on Sep 26, after market close. Needless to say, the company is one of the leaders in the DRAM and NAND semiconductor markets. DRAM is used in desktop computers, while NAND is a flash memory.
Micron has been progressing leaps and bounds a while back, thanks to a surge in memory demand on expanding cloud data centers, the Internet of Things, autonomous vehicles and new technologies, including 5G, to name a few. Thanks to the U.S.-China trade war, many of Micron’s customers from being buyers turned into sellers and remained overly cautious. The memory giant had a number of Chinese customers, including Huawei, which has made it vulnerable to trade issues. Demand for chip has slowed down, hurting Micron’s profits. The chipmaker, now, along with the rest of the broader industry had to cut down on capital expenditures.
However, things are now looking up for the chips market. And it’s solely because things have improved on the trade front. President Trump recently said that a deal to end the protracted trade war could happen “sooner than you think.” He added that China also wants “to make a deal very badly.”
Precisely, a U.S.-China trade deal will boost Micron as its biggest customer is China. Beijing had lifted tariffs on some U.S. products amid trade tensions. Trump also announced a delay in implementation of higher tariffs on $250 billion of Chinese goods. Trump tweeted that tariff hikes from 25% to 30% will go into effect on Oct 15 rather than the previously scheduled Oct 1.
And how can we forget that the chip bellwether has been on fire ever since the flash memory specialist squashed fiscal third-quarter earnings estimates last month. To top it, the firm has raised its 2019, 2020 and 2021 earnings per share estimates. And now Goldman Sachs (NYSE:GS) has upgraded Micron and raised its price target from $40 to $56. This new target is around 20% higher than current levels.
Goldman Sachs’ Mark Delaney said that “we are now more positive on global memory stocks. ... We believe that Micron’s stock will trade more on memory pricing trends and intermediate term EPS expectations than FY20 earnings.”
Analysts, thus, are bullish on the Micron stock. In fact, the company has seen its shares gain 55.9% so far this year, better than the Semiconductor Memory industry’s rally of 52.9%.
The Zacks Rank #2 (Buy) company also has an Zacks Investment Research
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