Micron Expected To Benefit From Healthy Memory Dynamics In 2017

Shares of Micron Technology, Inc. MU are set to open on a new 52-week high after strong first quarter results, driven by both resilient demand trends and improving DRAM pricing.

Quarter Review

Micron reported pro-forma EPS of $0.32, above Street and guidance of $0.28, and delivered revenue of $3.97 billion, in line with consensus of $3.98 billion and the guidance of $3.975 billion +/- $50 million.

Looking Ahead

For the February quarter, the company expects EPS of $0.58–$0.68, significantly higher than Street’s $0.39. The company guided revenue of $4.35 billion–$4.70 billion, well above consensus’ $3.91 billion estimate as favorable supply/demand industry dynamics are expected to continue for both DRAM and NAND.

Analyst's Commentary

According to Barclays, the key part is a better supply/demand balance translating to higher pricing in the memory market, especially DRAM, in to 2017. This is reinforced by the strong guidance and the brokerage hopes PC makers may shift DRAM purchasing to the first half given strong mobile demand in the second half.

“We continue to see signs of an overall healthier memory environment that can translate to sustained profitability for MU and the industry as a whole,” analyst Blayne Curtis wrote in a note.

Curtis, who reiterated his Overweight rating on the stock, also raised the price target by $2 to $26.

Shares of Micron Technology closed Wednesday’s trading at $20.58. In the pre-market hours Thursday, the stock climbed 11.52 percent to $22.95, a new 52-week high.