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After Slack’s debut yesterday at the NYSE, Slack’s stock is up about 3 percent. Micron is under pressure down after JPMorgan cut its price target on the company. Canopy is also down after they posted wider-than-expected Q4 loss. Yahoo Finance’s Ines Ferre breaks down the market action live from the NYSE.
The market faces its ultimate test this week when President Trump and President Xi meet at the G20 summit in Japan.
The memory industry has been in a cyclical downturn as supply exceeded demand in 2018. As memory is an oligopoly market, chipmakers reduced production to bring industry supply in line with demand. These efforts started to show results as decline in DRAM (dynamic random access memory) prices slowed.
Citi Research analyst Christopher Danely wrote Monday that Micron Technology Inc. could lose money by the end of the year "given how bad the DRAM environment is." While the last two DRAM downturns lasted six to eight quarters, the current downturn has only been going on for three quarters, Danely wrote. "On the bright side, we believe that the stock is close to a bottom, so long-term investors could nibble away at it," he said. Danely, who has a sell rating on the shares, argued that the company's Tuesday afternoon earnings report "should be fugly" as he expects that Micron will fall short of its outlook due to DRAM challenges. Micron's stock is down 0.3% in premarket trading Monday. It's gained 4.8% so far this year, as the S&P 500 has risen 18%.
NAND prices have been falling since last year, as most chipmakers transitioned from 2D planar NAND to 3D NAND, which created an oversupply situation. According to the DRAMeXchange, all NAND chipmakers’ NAND ASPs fell between 20% and 30% in the first quarter and are expected to continue falling in the second quarter.
Editor's note: InvestorPlace's Earnings Reports to Watch is updated weekly. Please check back next week for our latest earnings picks.The earnings calendar is surprisingly full next week. Typically, late June is a quiet time for the market. But several major companies in several key sectors will deliver earnings reports next week.Most notably, investors should be able to get a read on the consumer packaged goods sector. Conagra Brands (NYSE:CAG), McCormick (NYSE:MKC), Constellation Brands (NYSE:STZ,NYSE:STZ.B), and General Mills (NYSE:GIS) all release earnings reports next week. The market will get some good data on the struggling supplier side of that industry after decent, but unspectacular results from retailer Kroger (NYSE:KR) this week.InvestorPlace - Stock Market News, Stock Advice & Trading TipsElsewhere, FedEx (NYSE:FDX) delivers its fiscal fourth-quarter results on Tuesday afternoon. FedEx isn't quite the economic bellwether it once was, but its take on the macro economy still will be worth noting. And investors in United Parcel Service (NYSE:UPS) no doubt will be watching closely as the two incumbents try and manage rising pressure from Amazon.com (NASDAQ:AMZN). * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 Reports from KB Home (NYSE:KBH) and BlackBerry (NYSE:BB) also look important. Overall, there's a decent amount of news coming ahead of a holiday week. But even those reports aren't the most important to watch next week -- which shows just how much is going on. Before going on vacation, investors need to pay attention to these three key earnings reports next week: Micron (MU)Source: Shutterstock Earnings Report Date: Tuesday, June 25, after market closeFew companies outside of Micron (NASDAQ:MU) seem more in need of a good earnings report. And excluding retail, few sectors need a dose of optimism more than semiconductors. Hopes for a second-half recovery seem to have dimmed. Commentary after Broadcom (NASDAQ:AVGO) earnings this week are the latest signal that a chip rebound isn't coming until 2020 at the earliest.For Micron, memory prices still are headed in the wrong direction, but the question remains how long that will last. As such, commentary from management on Tuesday afternoon may be more important than the actual numbers.It will also be interesting to see how aggressive the company was in buying back MU stock given a $10 billion repurchase authorization announced last year. Did the company put its money where its proverbial mouth has been?MU stock does look attractive at the lows, in part because it looks so cheap. But that valuation exists because market participants believe earnings declines will continue for some time to come. If Micron can convince those investors otherwise, MU stock will rise. And it will likely bring other chip stocks -- and their suppliers -- along for the ride. Walgreens Boots Alliance (WBA)Source: Mike Mozart via FlickrEarnings Report Date: Thursday, June 27, before market openThen again, it could be worse for chip stocks; they could be pharmacies. Walgreens Boots Alliance (NASDAQ:WBA) heads into Thursday's earnings report just off a five-year low. It's not alone. CVS Health (NYSE:CVS) touched a six-year low last month. Rite Aid (NYSE:RAD) is in a similar spot.Here, too, both the stock and the industry desperately need some good news from earnings. But there's not a lot of reason to expect that good news is on the way. Front-end sales trends have been negative across the industry of late, with no sign of a bottom. Pressures on the pharmacy side -- fewer generics and higher drug costs -- aren't going anywhere. And as I wrote in April, Walgreens' execution has left quite a bit to be desired as well. * 5 Boring Stocks to Buy This Summer WBA stock is cheap, and investors might see this as the point of maximum pessimism. But that case could have made for the last few quarters; none of those earnings reports have changed the broader trend here. If Walgreens can deliver, pharmacy stocks can rally. At the moment, however, that seems like a big ask. Nike (NKE)Source: Shutterstock Earnings Report Date: Thursday, June 27, after market closeEarnings reports from Nike (NYSE:NKE) are always interesting. The sneaker giant is a barometer for consumer confidence, given its high-dollar and somewhat discretionary offerings. NKE stock itself generally doesn't move all that much after earnings, but its numbers and commentary can have an impact across the apparel and footwear industries.Thursday afternoon's report seems a bit more interesting than usual. As Luke Lango noted, Nike is one of the stocks with the largest exposure to trade war concerns. That's true on the cost front, given how many Nike products are manufactured in that country. But as Lango noted, Nike also gets 15% of its sales from Greater China.And so Nike represents a test case for the impact of U.S.-China relations at the moment. Are Chinese consumers shunning U.S. brands --even Nike, one of their perennial favorites? Can tariff impacts on the cost side be offset? If not, how big is the impact?At the moment, it looks like the trade war is a long way from ending. Investors trying to prepare for the 'new normal' should take a close look at Nike earnings to understand what that new environment might look like.As of this writing, Vince Martin has no positions in any securities mentioned.Compare Brokers The post 3 Earnings Reports to Watch Next Week appeared first on InvestorPlace.
The U.S.’s blacklisting of Huawei Technologies bars U.S. companies from doing business with the Chinese telecom firm—a key Micron Technology customer.
traded lower on Friday after an analyst at J.P. Morgan slashed his price target and earnings estimates for the memory chipmaker on expectations that the U.S. government's ban on doing business with Huawei and weak DRAM pricing will cut into the company's profits. Micron Technology stock was down 1.98% at $33.48 in trading on the New York Stock Exchange after J.P. Morgan analyst Harlan Sur reiterated his overweight rating on the company's stock but cut his price target to $50 from $64.
The US-China trade war accelerated in May as the two countries hiked tariff rates and the US banned firms from doing business with Huawei, one of the biggest customers of the tech industry. In May, the WSTS lowered its November 2018 estimate of a 3% YoY decline in global semiconductor revenue in 2019 to 12%.
The memory specialist is staring at yet another weak quarterly performance and tepid guidance that could send the stock lower.
The Zacks Analyst Blog Highlights: Adobe, Charter Communications, HCA Healthcare, Micron and Shopify
I happened to draw the short straw when it comes to InvestorPlace's assignments today. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsI've been asked to discuss Micron (NASDAQ:MU), one of the world's largest manufacturers of DRAM and NAND memory chips. Between the American ban on U.S. companies selling to Huawei, the U.S./China trade war, and a global slowdown in demand for memory chips, MU stock has taken a real beating, as it has tumbled 40% over the past 52 weeks. I would never pretend to be a technology expert. My expertise lies with retail and consumer goods companies, not businesses that make products that fit inside PCs and other types of computers. That said, it's essential for any regular investor to move outside his or her area of expertise from time to time. I'm doing that today by analyzing Micron stock. The last time I wrote about Micron was September 2018. In that article, I argued that Micron ought to keep buying back MU stock. At the time, it was trading around $45. In the nine months since my article, Micron stock has been stuck between $35 and $45. At the moment, it's at the bottom of that range, although it has traded lower than $35; its 52-week low is $28.39, which it hit in late December. MU stock is cheaper than it was last September in terms of share price, which makes me wonder if Micron should keep buying back MU stock. My Thoughts on Share RepurchasesI've never been a fan of share repurchases. CEOs and CFOs aren't very good at timing their buybacks, often buying their shares at 52-week highs rather than 52-week lows. Back in 2012, I discussed how Henry Singleton used share repurchases to maximum effectiveness. "Henry Singleton, founder of Teledyne -- one of America's most successful conglomerates -- used share repurchases with military-like precision to grow his company," I wrote in 2012. "When shares were expensive, he used shares to acquire companies; when they were cheap, he repurchased them. There was no middle ground for Singleton, and the strategy worked flawlessly."Micron itself has executed repurchases of MU stock in an efficient manner. In fiscal 2017, I noted last September, Micron repurchased almost $1 billion of MU stock at an average price of $19.50, well below its $35 share price at the time. In May 2018, Micron's board authorized a $10 billion share repurchase program that was slated to begin in fiscal 2019. Last quarter, as part of an accelerated share repurchase program, Micron repurchased 42 million shares of its MU stock at an average price of $42.86, about 25% higher than its current share price. In Q2, Micron repurchased 21 million shares at an average price of $33.43 a share, below its current share price. MU was buying during the December market correction. With MU stock up 7% year to date through June 19, it should have bought more shares. The Bottom Line on MU StockAs I said earlier, I am not an expert on semiconductor stocks.InvestorPlace contributor Wayne Duggan recently argued that investors should keep buying Micron stock despite the bad news because the company is profitable, expectations for it are low, and its shares are fairly valued. As a result, I don't see much of a problem with the company continuing to invest its free cash flow in its shares.Furthermore, after reading Seeking Alpha contributor Robert Castellano's June 19 article about Micron -(it's an excellent piece of analysis; you can read it here ),I get the sense that Micron is down but not out when it comes to the semiconductor industry.If MU stock heads below $30, Micron ought to back up the truck, because the company's long-term potential makes Micron stock worth more than $30 a share. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 * 5 Boring Stocks to Buy This Summer * 7 S&P 500 Stocks to Buy With Little Debt and Lots of Profits Compare Brokers The post Should Micron Keep Buying Back Its Stock? appeared first on InvestorPlace.
The US-China trade war is at its tipping point as both countries have levied up to 25% tariffs on each others’ imports and imposed trade bans. The United States has banned US firms from doing business with Huawei and China has threatened to restrict the export of rare earth minerals used to manufacture consumer devices and semiconductors.
Micron is set to report its fiscal 2019 third-quarter earnings on June 25. The memory and semiconductor industry data points and macroeconomic environment indicate that the overall semiconductor industry is in a downturn with no growth in sight for the rest of the year.
Shares of Micron Technology Inc. fell 1.5% in premarket trading Friday, after J.P. Morgan slashed its price target and earnings estimates, citing the U.S. government's ban on business with China-based Huawei and weak DRAM pricing. Analyst Harlan Sur reiterated the overweight rating he's had on the memory chip maker's stock for at least the past three years, but cut his price target to $50, which is 46% above Thursday's closing price, from $64. He also lowered his fiscal 2019 adjusted earnings-per-share estimate to $5.64 from $6.19 and his 2020 projection to $1.21 from $3.90. Micron is slated to report fiscal third-quarter results on June 25, after the close. Sur said the cuts were "primarily the result of the components bans to Huawei (13% customer during Micron's F1H19), worse than anticipated DRAM pricing and with expectations of a slower recovery as we look to the back half of this year and into next year on macro uncertainty/trade tensions," Sur wrote in a note to clients. Micron's stock has tumbled 22.4% over the past three months through Thursday, while the PHLX Semiconductor Index has slipped 1.4% and the S&P 500 has gained 3.5%.
The BAML survey highlighted the fact that investors are very bearish on growth expectations. A net 50% of the respondents expect global growth to weaken over the next 12 months. A record number of investors said that the global economy was in the late cycle.
In Bank of America Merrill Lynch’s June 2019 survey, the trade war remained the top risk cited by 56% of the respondents. Since Trump’s tweet on May 5, trade tensions have only revived with China retaliating in kind. Time and again, Trump has also talked about bringing another $300 billion worth of Chinese imports under tariffs.