Following Micron's Q1 Pre-Announcement, Could It Guide Above The Street?

Micron Technology, Inc. MU pre-announced its Q1 FY 2017 results ahead of expectations. There seems to be “additional upside” to the company’s Q2 results due to strong memory ASPs, especially in the datacenter, Goldman Sachs’ Mark Delaney said in a report. He maintains a Neutral rating on the company, while raising the price target from $18 to $21.

The EPS estimates for fiscal years 2017, 2018 and 2019 have been raised from $2.10 to $2.41, from $2.00 to $2.38 and from $1.60 to $1.85, respectively, reflecting higher DRAM pricing as well as the Inotera deal.

Guidance Likely Above The Street

Delaney expects Micron to announced its guidance for Q2 2017 revenue and EPS higher than the Street expectations. The revenue and EPS estimates for the quarter are at $3.98 billion and $0.60, versus the Street expectation of $3.88 billion and 0.38, respectively.

“Our industry discussions suggest that both server and PC DRAM prices are increasing qoq [quarter-over-quarter] in 1QCY17, and we expect flattish ASP trends in mobile DRAM (our discussions suggest that demand from the mobile market has been solid but did abate in the last few weeks from both Chinese OEMs and Apple),” Delaney wrote. He added that NAND pricing also seems to have been strong.