When markets unexpectedly sold off late in the day yesterday, that negativity might change for Thursday. Micron Technology (MU) posted strong quarterly results and an optimistic outlook. It expects a recovery in the smartphone and personal computer markets.
MU stock gained 4.79% in after-hours trade, trading at $82.49. The firm posted a loss of an adjusted 95 cents a share. Analysts had expected a -$1.01 EPS. Cash flow from operations in the quarter topped $1.4 billion.
Micron’s outlook is a bright spot. In Q2, it expects revenue in the range of $5.1 billion to $5.5 billion. It will lose between 21 cents and 35 cents a share on an adjusted basis. Analysts expected a $0.62 EPS loss. The firm is forecasting PC sales growth in the low to mid-single digit percentage in 2024. Server shipments will rise in the mid-single digit percentage.
The forecast should give HP Inc. (HPQ), Lenovo, Dell, Intel (INTC), Nvidia (NVDA), and AMD a lift. Those are the stocks in play for traders who want to capitalize on Micron’s bullish outlook.
Risks
Micron’s past and current quarterly loss is a concern. The valuations are also unfavorable at an EV/Sales of 6.07 times, 100.5% above the sector median (according to Seeking Alpha). The EV/EBITDA of 42.6 times is nearly 160% higher than the sector median.
Micron is a cyclical firm that is not in the rebound phase. Exercise caution when considering a position in MU or any of the other aforementioned stocks.
