Micron Technology (MU) Stock Gains On Earnings

Micron Technology MU Stock News

Micron Technology, Inc. (NASDAQ: MU) is heading up in a big way this morning, trading on gains of more than 13%. The gains come after the company announced its financial results, beating expectations and setting the stage for a strong second half. Here’s the scoop:

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MU Stock Sees Big Gains On Financial Results

In a press release issued after hours on Tuesday, Micron Technologies provided its financial results for the third quarter. Not only did the results beat analyst expectations, the company said that it is expecting to see a strong rebound in memory demand throughout the second half of the year. Here’s what we saw from the report:

  • Revenue – In terms of revenue, MU generated $4.79 billion in the third quarter. While the revenue represented a decline of 38.6% on a year over year basis, it did beat analyst expectations.
  • Earnings – Earnings also proved to be a hit. During the third quarter, the company generated non-GAAP earnings in the amount of $1.05 per share. While that figure was down by almost two thirds on a year over year basis, analysts were expecting for the declines to be far larger, predicting that earnings would come in at $0.80 per share.

While both revenue and earnings beat analyst expectations, these figures aren’t the only news that seems to be exciting investors. In fact, the picture ahead is starting to look a bit more colorful.

In the release, MU said that it is expecting that global DRAM semiconductor demand will see healthy year over year demand. While the company did say that further capex cuts will be needed for a good supply/demand balance in current inventories, the growth in demand suggests good times ahead for Micron and its investors.

With the financial results, the company also provided a corporate update. In particular, the company said that it has already started to ship some of its smartphone chips to Huawei Technologies. This follows the China-backed tech group’s blacklisting by the United States government on May 15th of this year.

In a statement, Sanjay Mehrotra, CEO at MU, had the following to offer:

We determined that we could lawfully resume shipping a subset of current products because they are not subject to Export Administration regulations and Entity List restrictions.

However, there is considerable ongoing uncertainty surrounding the Huawei situation, and we are unable to predict the volumes or time periods over which we will be able to ship products to Huawei.

Micron will continue to comply with all government and legal requirements, just as we do in all our operations globally. Of course, we cannot predict whether additional government actions may further impact our ability to ship to Huawei.

Following the earnings report, KeyBanc Capital analyst Weston Twigg seems to have a positive opinion of what to expect from the stock in the long run. In fact, in a statement to The Street, Twigg had the following to offer:

We’re lowering our estimates meaningfully, as the U.S.-China trade dispute has meaningfully lowered near-term demand and visibility, in our view. However, we continue to see very favorable long-term demand drivers, and we view the rapid response by memory producers to limit supply (especially in DRAM, which accounts for roughly 70% of MU’s revenue) as a positive indication of rational behavior.

What You Should Be Watching For Ahead

At the moment, it seems as though things are picking up for Micron Technology. Revenue and earnings came in well ahead of expectations and growth in demand for memory chips is expected to be strong over the year ahead. It will be interesting to see how Micron Technology takes advantage of this growth.

On the flip side, the situation between the United States and China doesn’t seem to be getting any better. Until it does, it could continue to put a drag on the company’s performance. However, keep an eye on the story as any positive news surrounding the Trade War could lead to gains in the value of the stock.

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What Do You Think?

Where do you think MU stock is headed moving forward? Join the discussion in the comments below!

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