Micron Sets Stage for Improving Market Conditions Throughout 2021

Earnings season has been over for more than a month now, but the earnings will start coming out rapidly all over again in just a few weeks. Micron Technology, Inc. (NASDAQ: MU) has an off-calendar quarter and fiscal year, and the semiconductor giant just reported that its revenue rose to $6.06 billion from $5.44 billion for the prior quarter. Its adjusted earnings of $1.23 billion in its fourth quarter came in at $1.08 per share.

Refinitiv had the consensus estimates pegged at $0.99 in earnings per share and $5.89 billion in revenues. Micron also reported that its operating cash flow was $2.27 billion, up from $2.02 billion for the prior quarter and versus $2.23 billion a year ago.

Investors had already dialed down expectations for quarterly numbers back in August.

While the quarterly review is always a focus, it is often the guidance that sets the tone for what is coming ahead. Micron offered guidance for its first fiscal quarter of 2021 as $5.2 billion in revenues, plus or minus $200 million. Refinitiv’s consensus is $5.31 billion. The company also gave guidance for gross margin of 27.5%. plus or minus 1 percent, or $825 million plus or minus $25 million.

One additional issue that should be given consideration is that Micron has still been repurchasing its own shares. Micron repurchased approximately 824,000 shares of common stock for roughly $41 million during its fourth quarter, and for all of fiscal year 2020 it spent $176 million to repurchase about 3.6 million shares, The company ended its quarter with cash, marketable securities and restricted cash of $9.26 billion, with a net cash position of $2.61 billion.

Micron is not the only semiconductor company that can influence the entire chip sector, and sometimes its own guidance and reaction turn out to have little comparison to other chip-related companies. That said, its shares were seeing mixed trading after closing up about 25 at $50.71 in Tuesday’s normal trading session.

Sanjay Mehrotra, Micron’s President and CEO, tried to talk up the outlook for the coming year. He said:

Micron delivered solid fiscal fourth quarter revenue and EPS resulting from strong DRAM sales in cloud, PC and gaming consoles and an extraordinary increase in QLC NAND shipments. We look forward to improving market conditions throughout calendar 2021, driven by 5G, cloud and automotive growth, and we are excited by the continued momentum in our product portfolio.

The last recognized form to give an analyst report was Goldman Sachs on September 14. The firm raised its rating to Buy from Neutral with a $58 target price. A month earlier, two calls were seen: Deutsche Bank downgraded it to Hold from Buy with a $48 price target and Cascend Securities maintained its Buy rating but cut its target down to $55 from $70.

Micron’s after-hours move was last seen up about 2% at $51.80 on Tuesday afternoon. Its 52-week trading range is $31.13 to $61.19 and its consensus analyst target price was $63.65 ahead of earnings.

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