A Preview Of Micron's Q2 Results: 'Expect Positive Tailwinds To Continue'

Micron Technology, Inc. (NASDAQ:MU) is scheduled to report its fiscal second-quarter results on March 23. The company is benefiting from tight supply/demand dynamics and increasing prices, which should drive operating leverage and allow the FQ2 print to be the high-end of the recently-raised guidance ranges, Loop Capital Markets’ Betsy Van Hees said in a report.

Van Hees added that the FQ3 guidance would likely exceed expectations. While maintaining a Buy rating on Micron and raising the price target from $27 to $30, the analyst stated that the favorable memory supply/demand dynamics could continue in the near term.

Recently Raised Guidance

In its 8-K filing, Micron raised its FQ2 revenue guidance from $4.35 billion–$4.7 billion to $4.65 billion +/- $50 million. This compared with the Street estimate of $4.50 billion. The company also raised its pro forma EPS from $0.58–$0.68 to $0.86 +/- a few cents, significantly beating the Street estimate of $0.63.

The upside was driven by “product mix, cost improvements, and better pricing environment,” Van Hees noted.

Related Link: A Look At Micron's Revenue Channels

Positive Tailwinds To Continue

Micron has indicated that it expects the favorable demand environment to continue in FQ3. Operational improvements from fab optimization and assembly and back-end improvements are also expected to boost the bottom line. Moreover, the improved pricing environment should continue into FQ3.

Van Hees raised the revenue estimates for FQ2 and FQ3 from $4.53 billion to $4.69 billion and from $4.57 billion to $4.79 billion. The pro forma EPS estimates for FQ2 and FQ3 have been raised from $0.63 to $0.88 and from $0.72 to $0.96, respectively.