Micron Technology 2Q Preview: This Analyst Expects Revenue Upside, Margin Pressure

Micron Technology Inc MU is scheduled to report its fiscal second-quarter earnings on Thursday.

While the company is likely to report its quarterly results broadly in-line with expectations, there is "some potential revenue upside, but some risk to margins," according to RBC Capital Markets.

The Micron Technology Analyst: Analyst Matt Bryson reaffirmed an Outperform rating and price target of $125.

The Micron Technology Thesis: Softer DRAM and NAND pricing in the beginning of this year could push the company's margins into the lower half of the fiscal second-quarter guidance range, Bryson said in the note.

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Micron Technology had suggested that its sequential revenue growth in the fiscal third quarter may be boosted by improved shipment levels, with a rebound in client demand and normalization of customer inventory levels, the analyst stated.

He added, however, that the company expects this to cause a mix shift towards lower margin parts that could cause margins to contract by a "few hundred bps."

"With our model already contemplating a 260 bps dip in GMs and a modest lift in revenues, we see some potential again MU is able to project revenue upside vs. our estimates, but also with more modest margins vs. our expectations," Bryson further wrote.

Price Action: Shares of Micron Technology had risen by 0.38% to $102.10 at the time of publication on Wednesday.

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