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Results: Micron Technology, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

Simply Wall St
·4 min read

It's been a good week for Micron Technology, Inc. (NASDAQ:MU) shareholders, because the company has just released its latest first-quarter results, and the shares gained 3.0% to US$77.42. It looks like a credible result overall - although revenues of US$5.8b were what the analysts expected, Micron Technology surprised by delivering a (statutory) profit of US$0.71 per share, an impressive 28% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Micron Technology after the latest results.

Check out our latest analysis for Micron Technology

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Taking into account the latest results, the consensus forecast from Micron Technology's 27 analysts is for revenues of US$25.0b in 2021, which would reflect a notable 13% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 26% to US$3.41. In the lead-up to this report, the analysts had been modelling revenues of US$24.1b and earnings per share (EPS) of US$3.24 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

It will come as no surprise to learn that the analysts have increased their price target for Micron Technology 22% to US$94.61on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Micron Technology analyst has a price target of US$121 per share, while the most pessimistic values it at US$60.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Micron Technology's rate of growth is expected to accelerate meaningfully, with the forecast 13% revenue growth noticeably faster than its historical growth of 11%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Micron Technology to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Micron Technology's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Micron Technology going out to 2023, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Micron Technology that we have uncovered.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.