Micron technology (MU) shares fell on Friday after the memory chipmaker’s forecast for the current quarter missed estimates by a wide margin. MU stock led other semiconductor stocks lower in the report.
X
The Boise, Idaho-based company announced late Thursday that it earned an adjusted $2.59 per share on sales of $8.64 billion for the fiscal third quarter ended June 2. Analysts polled by FactSet expected Micron’s earnings per share to be $2.43 on sales of $8.64 billion. Year over year, Micron’s earnings rose 38% while revenue rose 16%.
For the current quarter, Micron is forecasting adjusted earnings per share of $1.63 on sales of $7.2 billion. However, analysts were expecting earnings of $2.60 per share on Micron’s fourth-quarter revenue of $9.15 billion. In the year-ago quarter, Micron earned $2.42 per share on sales of $8.27 billion.
“Recently, the industry demand environment has weakened and we are taking action to moderate our supply growth in fiscal 2023,” Chief Executive Sanjay Mehrotra said in a press release. “We are confident in the long-term long-term demand for work and storage and are well positioned to deliver strong financial performance across all cycles.”
MU stock has a below average compound rating
Micron blamed flagging smartphone and PC sales and demand and supply issues in China for its disappointing outlook. The company also cited increased inventories at its cloud computing customers.
In the stock market, MU shares fell 3% today to close at 53.65. During Thursday’s regular session, MU shares fell 1.3% to 55.28.
The Philadelphia semiconductor index, known as the SOX, fell 3.8% on Friday. The SOX includes the 30 largest semiconductor stocks traded in the US so far, the SOX is down 37.7%.
MU stocks are ranked fifth out of ten stocks in the IBD Computer Data Storage industry group according to the IBD Stock Checkup. It has a below-average IBD Composite Rating of 46 out of 99.
IBD’s Composite Rating is a mix of key fundamental and technical metrics designed to help investors gauge a stock’s strengths. The best growth stocks have a composite rating of 90 or better.
Analysts have lowered the target price on MU shares
At least 15 Wall Street analysts lowered their price targets on MU stock following the company’s earnings report. Of these analysts, 12 have a buy rating for Micron, two are neutral, and one has a sell rating.
In recent weeks, Wall Street analysts have lowered their expectations for semiconductor companies ahead of the second-quarter earnings season.
“Memory is usually the first shoe to fall in a (semiconductor) down cycle,” Robert Maire, president of consulting firm Semiconductor Advisors, said in a newsletter. “Results season could indeed get very ugly as more shoes could fall into the tech and chips sectors.”
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories about consumer technology, software and semiconductor stocks.
YOU MAY ALSO LIKE:
Chip design firms have been upgraded while chip makers have been downgraded
Qualcomm stock surges as Apple’s 5G modem chip ‘fails’, says analyst
PC Market Chatter stirs up chip, computer manufacturer
Best Growth Stocks to Buy and Watch: See IBD Stock List Updates
Find winning stocks with MarketSmith’s pattern recognition and custom screens