Goldman Sachs Reviews Micron's Earnings Following Weak Guidance

Micron Technology, Inc. MU reported its 3QFY16 results with the revenue below the estimate and the consensus.

Goldman Sachs’ Mark Delaney maintains a Neutral rating on the company, while lowering the price target from $13 to $12.

Results And Guidance

DRAM sales grew 9 percent quarter-on-quarter in 3Q, while NAND sales declined 15 percent quarter-on-quarter.

The EPS of -$0.08 was well below the estimate and marginally below consensus.

Related Link: Barclays Doesn't Expect Micron To Return To Profitability Until 2H 2017; Stock Drops >8%

The company guided to 4Q sales of $2.9–$3.2 billion, below the estimate and consensus, with the EPS guidance of -$0.16 to -$0.24 also falling short of expectations.

“We attribute guidance downside vs. consensus to lower DRAM ASPs, lower NAND cost downs, lower NAND bits and interest expense,” Delaney mentioned.

7th Guidance Miss

Delaney pointed out that this was the seventh consecutive time that Micron Technology has issued its guidance below the consensus.

“While we do still expect positive 1QFY17 EPS as we believe NAND and parts of the DRAM market are seeing improved S/D, we believe meaningful profitability will require better execution from Micron,” the analyst stated.

The analyst expects the company to see weak EPS in 2017, as well as cash burn for the next two quarters.

The EPS estimates for FY16, FY17 and FY18 have been lowered to reflect sales and margin expectations.

At time of writing, Micron was down 8.76 percent on the day at $12.56.