3 key takeaways from Micron’s Q3 earnings report

Micron Technology Inc (NASDAQ: MU) reported its financial results for the third quarter on Wednesday that beat Wall Street estimates. Shares of the company were down more than 2% in after-hours trading on Wednesday.

1. Financial performance

Micron reported net earnings of $1.74 billion in the third quarter versus the year-ago figure of $803 million. On an adjusted basis, the Boise-headquartered company earned $1.88 in Q3.

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Micron generated $7.42 billion of revenue in the recent quarter that represents an annualised growth of 36%. According to FactSet, experts had forecast the company to post $7.23 billion of revenue and $1.72 of adjusted EPS. 

2. Guidance for the fourth quarter

For the fiscal fourth quarter, Micron forecasts roughly $8.2 billion of revenue and $2.30 of non-GAAP per-share profit. In comparison, analysts are calling for $7.9 billion of revenue and $2.18 of profit per share.

In related news, Micron said on Wednesday it is divesting its chip production fab in Lehi and Utah to Texas Instruments for $900 million in cash.

3. Other notable figures

DRAM revenue was up 52% in Q3 on a year over year basis, while NAND revenue climbed by 9%. Compared to the prior quarter (Q2), DRAM average prices jumped 20%. For NAND, average prices were up just under 10%.  

Micron expects demand for DRAM to grow 20% in fiscal 2021 and close to 35% for NAND. Supply, it added, will keep restricted into calendar 2022.

Susquehanna analyst’s remarks on CNBC’s “Closing Bell”

Commenting on the earnings report, Susquehanna senior analyst, Mehdi Hosseini said on CNBC’s “Closing Bell”:

“Micron delivered what we were expecting, but for the stock to continue moving towards our price target, the investors have to be convinced that margin expansion will remain intact, especially in 2022. I think from here on is a margin expansion story. In my opinion, we still have 10 points of upside on margins from here.”

Hosseini expressed confidence in his interview that “memory prices will rebound, DRAM prices will rebound, and margin expansion will continue.”