Most analysts remain positive on Micron stock despite disappointing results

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By Senad Karaahmetovic

Shares of Micron Technology (NASDAQ:MU) are down about 2% in pre-open Thursday after the chipmaker reported weaker-than-expected first-quarter earnings and announced job cuts.

Micron posted an adjusted loss per share of $0.04 on revenue of $4.09 billion, missing the analyst consensus for a loss per share of $0.01 on sales of $4.15B. Micron is experiencing a massive slowdown with revenue down 47% year-over-year (YoY) and cash flow down 76% YoY to $943 million. The adjusted gross margin was 22.9% from 47% YoY.

"Micron delivered fiscal first-quarter revenue and EPS within guidance ranges despite challenging conditions during the quarter," said Micron Technology President and CEO Sanjay Mehrotra. "Micron's strong technology, manufacturing, and financial position put us on solid footing to navigate the near-term environment."

Micron announced it will cut about 10% of its staff while executive salaries are also being cut for the remainder of fiscal 2023.

“We expect improving customer inventories to enable higher revenue in the fiscal second half, and to deliver strong profitability once we get past this downturn.”

For this quarter, Micron expects an adjusted loss per share of $0.52-0.72 on revenue of $3.6B-4B. Analysts were looking for an adjusted loss per share of $0.29 on revenue of $3.88B.

Morgan Stanley analysts cut the price target on MU stock to $46 per share after results demonstrated “a large gap between supply and demand.” They also reaffirmed an Underweight rating on Micron stock as they see “oversupply persisting through CY23.”

Goldman Sachs analysts reiterated a Buy rating on Micron stock and noted “constructive supply actions” while the pace of pricing recovery remains “uncertain.”

“While we maintain our Buy rating on MU on favorable risk-reward, we acknowledge that Micron, along with its industry peers, will need to demonstrate sustained and consistent supply-side discipline for pricing to improve in 2HCY23 and for investors to once again believe that memory industry margins and FCF can grow on a through-cycle basis,” the analysts wrote in a note.

KeyBanc analysts also reiterated an Overweight rating and see “favorable risk/reward and continue to see compelling LT secular growth.”

Micron stock is down 45% year-to-date (YTD).