Micron's Potential Revenue Decline Offset by Upcoming Cyclical Recovery: Analyst

Raymond James analyst Srini Pajjuri reiterates an Outperform rating on Micron Technology, Inc MU.

The analyst expects Micron to report more or less in-line quarterly results for May. The company recently updated the potential revenue impact from China's CAC decision to be in the low double digits. 

As such, the August quarter outlook for sequential revenue decline appears more likely vs. his model for ~11% sequential growth. 

The analyst did not rule out risk to near-term margins and potential inventory write-downs, although China's impact should be short-lived given the commodity nature of MU's products. 

Looking ahead, he believes the worst is behind for Memory and expects customer inventories to normalize by the calendar 4Q. 

Aggressive production cuts across the industry should set the stage for price stabilization and a cyclical recovery starting in the second half of FY23, even as end demand remains weak. 

Pajjuri is also optimistic that the severity of the current downturn will lead to better supply discipline in the industry. 

Price Action: MU shares traded higher by 1.80% at $66.63 on the last check Tuesday.