Micron Technology (NASDAQ: MU) started the week of its earnings on a positive note. The stock won an analyst’s praise with a $100 PT (price target). But the win proved short-lived. In combination with a market drop and disappointing results from Micron, the stock failed to get back to $60 a share. What went wrong, fundamentally, with Micron’s quarter?
In its fiscal quarter, Micron earned $2.82 a share on revenue of $7.35 billion. Revenue rose an impressive 58% from last year. Managed NAND solutions and DDR4 memory gave Micron the company’s mobile business to record revenue. SSD (solid state drive) sales climbed a significant 80% Y/Y. The graphics card market and automotive market both drove demand for memory (DRAM) and flash storage (NAND) demand higher. Looking ahead, the company will introduce the SATA SSD in smartphones. The 64-layer 3D TLC NANS will give Qualcomm’s product a 15% performance boost.
Outlook
VR and AI, along with smartphone and storage segments, will continue to support memory and NAND selling at similar prices. For NAND, shifting to 64-bit 3D NAND will allow Micron to raise supply and alleviate excess demand in the markets. Micron is also expecting SSD’s to displace HDD’s, which is bad news for Western Digital (WDC).
Risks and takeaway
Micron continues to be an attractive value play. Lower DDR prices will hurt revenue but not profits.
