Micron MU stock is down around 20% since May 1 despite some recent positive movement from chip stocks after the latest sign that a resolution to the ongoing trade war might be near. Yet, no matter what happens on the trade war front, good or bad, Micron looks to be headed for a near-term downturn at the very least amid the broader semiconductor industry decline.
With that said, let’s see what we should expect from Micron’s third quarter fiscal 2019 financial results that are due out on Tuesday, June 25.
Micron is a chip power and is one of the largest makers of DRAM and NAND memory chips. Investors should know that DRAM stands for dynamic random-access memory and are used in personal computers and servers. NAND flash memory, on the other hand, plays vital roles in the advancement of smartphone technology and solid-state hard drives.
Micron has fallen on hard times amid the historically cyclical chip market. This includes a significant decline in DRAM and NAND pricing, along with reduced demand from companies like Apple AAPL. On top of all of this, trade war fears have created too much uncertainty for many investors, especially in the very interconnected semiconductor market. On top of that, Micron had seen its sales to Chinese firms like Huawei grow in recent years, which could spell big trouble going forward if some type of end to the trade war is not reached.
Micron stock is still up roughly up 8% YTD, yet MU shares hovered at $34.13 through morning trading Thursday. This represented a 45% downturn compared to MU’s 52-week intraday trading high of $61.83 per share. Of course, Micron is not alone, as shares of fellow semiconductor industry companies such as Intel INTC and Nvidia NVDA rest well below their 12-month highs right now.
Outlook & Earnings Trends
Looking ahead to Tuesday, Micron’s Q3 revenue is projected to fall 39.4% from $7.8 billion in the prior-year quarter to $4.72 billion, based on our current Zacks Consensus Estimate. Last quarter, MU’s revenue dropped just 20.5%, but did fall short of our estimate.
Meanwhile, Micron’s fiscal 2019 revenue is expected to sink 23.5% to $23.23 billion, pushed down by a projected 44.3% fourth-quarter decline. Plus, the chip firm’s fiscal 2020 top-line is expected to sink 9.4% below our 2019 estimate.
Micron’s outlook appears even worse on the bottom end of the income statement. MU’s adjusted Q3 earnings are expected to tumble 74.6% from $3.15 per share in Q3 2018 to $0.80 per share. Peeking ahead, the company’s Q4 earnings are projected to plummet nearly 81%, which would then help bring fiscal 2019’s EPS figure down 48.5%. Similar to Micron’s 2020 revenue estimate, its adjusted earnings are projected to fall 33% below our current-year projection.
Along with the brutal Q3, 2019, and 2020 outlook, Micron’s earnings estimate revision picture has turned very negative since its third quarter got underway. The firm has also received some negative estimate revisions within the last week, with its most recent Q3 estimate calling for $0.74 per share—far below its current $0.80 consensus estimate.
Micron’s outlook, coupled with its rough earnings revisions picture has MU as a Zacks Rank #5 (Strong Sell) at the moment, with an “F” grade for Momentum in our Style Scores system. With all of this in mind, investors might want to stay away from Micron stock for now. Those interested should pay close attention to any updated Q4 and full-year guidance.
Micron is set to release its Q3 earnings results after the closing bell on Tuesday, June 25. Make sure to head back to Zacks for a complete breakdown of the firm’s actual metrics, along with analysis of what might be next for the DRAM and NAND memory chip powerhouse amid rough times for the semiconductor sector.
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