Micron Technology (MU) to guide below estimates, but Citi still positive

Citi analyst Christopher Danely said the firm expects Micron Technology (NASDAQ: MU) to miss estimates when it releases fiscal first quarter 2023 results after market close today.

"We expect the company to report and guide below our estimates and Consensus given the DRAM collapse; however, our reasons to be positive on Micron remain unchanged," wrote Danely, who reiterated a Buy rating and $75 price target on the stock.

However, they also see capex and utilization cuts by Micron and Hynix creating a bottom in 1Q23, with Micron "trading close to trough valuation."

The "print is gonna be ugly," the analyst declared. "We expect Micron to report F1Q23 revenue below our estimate of $4.25 billion (down 36% QoQ) and Consensus of $4.14 billion (down 38% QoQ), and F1Q23 EPS below our estimate of ($0.09) and Consensus of ($0.07) due to deteriorating DRAM pricing."

He added that the guide will be even worse. "We expect Micron to guide F2Q23 sales below our estimate of $4.00 billion (down 6% QoQ) and Consensus of $3.86 billion (down 8% QoQ) with F2Q23 EPS guide below our estimate of ($0.30) and Cons of ($0.40)," he said.

"But what matters to the stock is the bottom is here. Both Micron and Hynix are pulling back on capex and utilization rates, which should create a bottom for the DRAM market in 1Q23."

By Sam Boughedda

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