Micron Technology Inc (MU) sees solid third-quarter revenue as the need to work from home due to the coronavirus outbreak restrictions is boosting demand for data center and notebook services.
The chipmaker forecasts third-quarter revenue to be in the range of $4.6 billion to $5.2 billion, and gross margin to be in the range of 31%, plus or minus 150 basis points. Operating expenses are expected to come in at about $825 million, plus or minus $25 million. EPS is forecast to be around $0.55 based on a share count of about 1.14 billion fully diluted shares.
Wall Street analysts are upbeat on the stock. Out of the 19 analysts covering Micron’s shares, 17 have a Buy rating, 1 has a Hold rating, and 1 has a Sell rating, adding up to a Strong Buy consensus rating. The average price target of $67.64 provides investors with a potential 59% gain in the stock in the coming 12 months. (See Micron’s stock analysis on TipRanks)
Revenue in the second quarter declined to $4.80 billion from $5.84 billion for the same period last year, the company said in a statement.
“Micron delivered solid second quarter results and revenue at the high end of the guidance range, despite the unfolding COVID-19 pandemic,” said Micron Technology President and CEO Sanjay Mehrotra. “We will emerge from this challenging time well-positioned to capture the robust long-term demand opportunities for memory and storage.”
Mehrotra added that in China, lower consumer demand was offset by stronger data center demand as a result of increased gaming, e-commerce and remote work activity.
“Data center demand in all regions looks strong and is leading to supply shortages,” said Mehrotra. “We are seeing a recent increase in demand for notebooks used in the commercial and educational segments to support work-from-home and virtual learning initiatives occurring in many parts of the world.”
Micron said that on March 13, 2020, it drew $2.5 billion from its revolving credit facility. In the second quarter, the chip giant repurchased 785,000 shares for $44 million, it added.
Micron, which employs about 37,000 people in 18 countries around the world, said two employees had tested positive for the coronavirus.
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