Micron Technology (ticker: MU) shares lost about 5 percent on Friday, despite the company reporting fiscal third-quarter earnings that topped Wall Street’s expectations. Micron reported Q3 earnings per share of $1.62 on revenue of $5.57 billion. Both numbers exceeded consensus analyst estimates of $1.51 and $5.41 billion, respectively.
Gross margins also jumped 10 percent in Q3 to 46.9 percent.
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“The global trends taking shape today, including machine learning and big data analytics, are exciting and create significant opportunities for Micron,” CEO Sanjay Mehrotra says.
Mehrotra said the earnings beat was driven by Micron’s recent cost-cutting initiatives, as well as a favorable pricing environment for its dynamic random access memory and NAND chips.
DRAM bit sales were up 5 percent compared to Q2, while NAND bit sales increased 17 percent sequentially. The average DRAM sales price was up 14 percent sequentially, while the average NAND sales price was up 3 percent.
Sales on the quarter jumped 20 percent compared to the previous quarter and 92 percent compared to the same quarter a year ago.
Micron says investors can expect more impressive growth in the coming quarter. The company guided for Q4 EPS between $1.73 and $1.87 on revenue between $5.7 billion and $6.1 billion. The midpoint of the company’s Q4 guidance suggests 83 percent year-over-year revenue growth.
The strong Q3 from Micron was certainly enough to get Wall Street’s attention. Deutsche Bank, Goldman Sachs, Cowen and Susquehanna all raised their price targets for Micron after the report.
“Micron’s May quarter results show strong revenue and gross margin momentum, with a further sequential rise in sales and improvement in gross margin expected in the upcoming quarter,” Wells Fargo analyst David Wong says in a note issued last week. “The company appears to be benefiting from a favorable memory pricing environment, firm memory bit demand and lower costs from its technology transitions.”
Friday’s share price weakness may simply be a case of investors taking profits in the high-flying tech stock. Micron shares are up 128 percent in the past year.
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Wells Fargo maintains an “outperform” rating for Micron and has a $40 price target for the stock.
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Micron Earnings Beat Driven by Strong Pricing Environment originally appeared on usnews.com
