Rosenblatt Sees Micron's 2023 Setup As Positive; Expects Stock Price To Double

  • Micron Technology, Inc MU reports August quarter earnings on September 29, after the market close.
  • Rosenblatt analyst Hans Mosesmann expects sales and non-GAAP EPS to be roughly in-line with his sales and EPS estimates of $6.70 billion and $1.24, coming below the consensus of $6.82 billion and $1.39, respectively.
  • He reiterated a Buy and a $100 price target.
  • Micron management pre-announced negatively the August quarter earlier that month on continued demand weakness and inventory reductions in PC and smartphone market segments.
  • For the November quarter guide, he sees both revenue and gross margins declining sequentially as bit shipment growth continues to deteriorate in the near term. 
  • He expects gross margins for the quarter to decrease sequentially and looks to the call for further details on the margin outlook into FY23. 
  • Due to the inability of the company to reduce capex quickly this quarter because of critical new technology product investments, FCF for Q1 FY23 will likely be negative. 
  • He found it unsurprising for investors that management may take a conservative tone on the call, addressing the near-term challenges. Still, hitting points about the secular growth drivers for Micron in the data center, automotive, industrial, and other segments as demand is fueled by increased adoption of AI and 5G. 
  • Memory and storage are supporting the growth of the new digital economy, and he saw the company highlighting its forward strategy and product roadmap for the future to increase market share and capture the projected $30 billion TAM for the memory and storage market by 2030.
  • Last week, multiple analysts lowered their price targets on the stock as the chip industry showed weakness, which creates an unfavorable setup heading into the company's earnings results.
  • Evercore ISI analyst C.J. Muse cut the price target on Micron to $70 from $85 and kept an Outperform. 
  • Muse expects Micron's August quarter results to come below the low-end of original guidance. He also sees the November quarter leaning significantly below consensus.
  • Susquehanna analyst Mehdi Hosseini reduced the price target on Micron to $60 from $68 and kept a Positive rating ahead of its earnings release. 
  • He expects the Memory manufacturers to start cutting back on wafer loading, which will help accelerate inventory correction.
  • Price Action: MU shares traded lower by 1.94% at $49.13 on the last check Monday.
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