Micron Technology Earnings and the Way Forward!

More Panic – But More Profit With Options Trading!
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by Ian Harvey
March 23, 2020


Micron Technology will report earnings after the market closes on Wednesday, March 25, 2020. The consensus earnings estimate is for $0.37 per share on revenue of $4.66 billion; but the Whisper number is higher at $0.41 per share.

Despite the coronavirus, Fed rate cuts, global disruption and panic, as well as several other factors could see MU beat-the-market!

See how we are profiting from this situation!

Micron Technology, Inc. (NASDAQ: MU)

Expect another potentially volatile week for markets as coronavirus cases continue to rise and economic data reveals the outbreak’s damage on the U.S. economy.

Asian stocks and U.S. equity futures tumbled after a surge in the global death toll from the coronavirus and a failure as yet by Congress to agree on an aid plan. Treasury yields retreated.

The Dow Jones Industrial Average futures fell more than 800 points, or 4.7%, along with S&P 500 and Nasdaq-100 futures. Earlier in the session, futures hit their “limit down” levels, falling 5%. Downside limits to futures contracts are implemented to ensure orderly market behavior once trading hits a certain threshold. No trades below that level are allowed.

The Dow is off 35.1% from its Feb. 12 peak, while the S&P 500 is 32% and the Nasdaq is down nearly 30% from their Feb. 19 peaks.

A fiscal stimulus bill failed a key procedural Senate vote Sunday as Democrats warned the measure did not do enough to help workers and too much to bail out companies.

Markets are “pricing a global recession, which we expect; stay defensive,” Goldman Sachs Group Inc. strategists Kamakshya Trivedi and Zach Pandl, wrote in a note Sunday. “The uncertainties around the depth and duration of the hit to the global economy remain high and the momentum in our own, and other, economic forecasts continues to be sharply negative with downside risks.”

Wall Street has been clamoring for fiscal economic relief as the number of coronavirus cases keep surging. The number of confirmed global cases surpassed 300,000 over the weekend as deaths now total over 13,000, according to data from Johns Hopkins University.

On top of that, Federal Reserve Bank of St. Louis President James Bullard told Bloomberg News during a Sunday interview that he is forecasting the U.S. unemployment rate to hit 30% in the coming months as the world continues to grapple with the coronavirus pandemic. “This is a planned, organized partial shutdown of the U.S. economy in the second quarter,” he said.

The Expected Earnings Report.....

Micron Technology, Inc. (NASDAQ: MU), a memory chip manufacturer, will report earnings after the market closes on Wednesday, March 25, 2020. The consensus earnings estimate is for $0.37 per share on revenue of $4.66 billion; but the Whisper number is higher at $0.41 per share.

The company's guidance was for earnings of $0.29 to $0.41 per share. Consensus estimates are for earnings to decline year-over-year by 77.84% with revenue decreasing by 20.14%.

For the last reported quarter, it was expected that Micron Technology would post earnings of $0.48 per share when it actually produced earnings of $0.48, delivering no surprise.

Over the last four quarters, the company has beaten consensus EPS estimates two times.

Even with the coronavirus pandemic creating untold damage on the stock market it is possible that the server demand environment will be able to hold out. MU stock has sold off along with other chip names, pulling back about 40% from February highs.


But, there are several reasons that Micron Technology may pull through this situation and gain back its momentum, due to.....

  • the memory environment and the continued moves higher in the spot and contract markets,
  • the demand for server DRAM and NAND as the world loads up the cloud - either temporarily or more long term - to continue productivity from the comfort of the home office or living room - one analyst has argued that an increase in employees working from home could help memory pricing — and Micron earnings,
  • the valuation the market has given Micron's shares - the market has priced in Micron's down cycle before the upcycle even got underway, and  
  • it's the strong balance sheet that Micron Technology has worked on for the past two years for times just like this. Micron Technology is in the best shape since it started, both in terms of production of memory and in terms of its balance sheet.

Other Influencing Factors.....

Despite the negative factors associated with.....

  • The coronavirus outbreak to have negatively impacted Micron’s fiscal second-quarter performance;
  • the high business exposure to China where Micron’s early quarter benefits from resuming chip shipments to Huawei might have been significantly offset by global business disruptions since late January;
  • the higher mix of lower-margin NAND, coupled with low memory prices and minimal decline in manufacturing cost, expected to have strained margins;
  • the underutilized expenses associated with the impending acquisition of IM Flash Technologies, its joint venture with Intel INTC, denting margins; and
  • DRAM revenues likely to have declined year over year and sequentially as well;

.....there is plenty of optimism for Micron Technology due to.....

  • short interest having decreased by 22.7% since the company's last earnings release,
  • Micron Technology witnessing progress in customer inventory adjustments in most of its end-markets since second-half 2019, positively impacted bit demand for DRAM during the fiscal second quarter,
  • a solid growth in DRAM bit shipments for the cloud, graphics, gaming consoles and automotive application markets, and
  • the 1Z DRAM chips, which Micron Technology began to ship last August, are expected to have provided a tailwind to its business - in the fiscal first quarter, the 1Z DRAM chips had the fastest revenue ramp up for any product in its history.



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An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.

It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!

Best of Trading,
Ian Harvey
Director of Stock Options Made Easy


”Success is simple. Do what's right, the right way, at the right time.”

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