Micron Technology MU is expected to exceed market expectations in its second-quarter fiscal 2024 results scheduled for release after the market closes on Mar 20.
For the fiscal second quarter, Micron projects an adjusted loss of 28 cents per share (+/- 7 cents). The Zacks Consensus Estimate stands at a narrower loss of 27 cents per share compared to a loss of $1.91 in the same period last year.
The company anticipates revenues of $5.3 billion (+/- $200 million). The consensus forecast for revenues is $5.33 billion, indicating a substantial 44.4% surge from the year-ago quarter’s $3.69 billion.
Having surpassed the Zacks Consensus Estimate three times in the last four quarters, Micron’s average positive surprise stands at -41.6%.
Let’s delve into the factors leading up to this highly anticipated announcement.
Exploring Key Factors
Micron’s second-quarter performance is poised to benefit from the strong demand for its memory chips utilized in GPU-driven AI servers. Datacenter operators are ramping up generative AI and large language models using GPUs, driving the need for memory chips at the core of these servers, consequently boosting Micron’s top-line performance this quarter.
An improved supply-demand environment is also expected to bolster Micron’s performance. After facing challenges from substantial customer inventory adjustments in previous quarters, the company witnessed enhanced supply-demand dynamics in the first quarter, resulting in increased pricing for DRAM and NAND.
The Zacks Consensus Estimate for DRAM revenues in the second quarter is $3.89 billion, indicating a 42.9% year-over-year rise. The forecast for NAND revenues is $1.39 billion, signaling a remarkable 56.6% surge from the prior-year period.
Nevertheless, any positive momentum may be counterbalanced by soft consumer spending due to inflationary pressures and concerns surrounding a global economic slowdown impacting memory chip demand in the smartphone and PC markets.
Moreover, Micron’s heavy reliance on China amid ongoing trade tensions with the U.S., alongside a higher ratio of lower-margin NAND and only marginal reductions in manufacturing costs, may exert pressure on margins.
Forecasting Earnings Performance
Our analysis indicates a potential earnings beat for Micron in this quarter. The presence of a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) enhances the likelihood of surpassing earnings estimates, a scenario applicable to Micron in this instance.
Earnings ESP: With an Earnings ESP of +23.29% (the variance between the Most Accurate Estimate of -21 cents per share and the Zacks Consensus Estimate of -27 cents), Micron is poised for a positive surprise. Employ our Earnings ESP Filter to discover stocks with potential buy or sell signals pre-earnings reveal.
Zacks Rank: Micron holds a Zacks Rank of #2.
Favorable Stocks in the Market
As per our assessment, FactSet Research Systems FDS, Amprius Technologies AMPX, and Progress Software PRGS are positioned to outshine earnings expectations upon their impending releases.
FactSet Research is set to report Q2 fiscal 2024 results on Mar 21, boasting a Zacks Rank of #2 and an Earnings ESP of +0.59%. The company previously exceeded expectations three times in the last four quarters, with an average surprise of 1.7%.
Anticipated to report Q4 2023 outcomes on Mar 21, Amprius holds a Zacks Rank of #3 and an Earnings ESP of +13.04%. Progress Software, scheduled for Q1 fiscal 2024 results on Mar 26, maintains a Zacks Rank of #3 and an Earnings ESP of +0.44%.
While considering a slight year-over-year decline in PRGS’ Q4 earnings, projections demonstrate a revenue uptick of 9.8%.
Enhance your acumen on forthcoming earnings announcements using the Zacks Earnings Calendar.
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