Stock Analysis

Analysts Just Slashed Their Micron Technology, Inc. (NASDAQ:MU) Earnings Forecasts

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NasdaqGS:MU
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The analysts covering Micron Technology, Inc. (NASDAQ:MU) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the 33 analysts covering Micron Technology, is for revenues of US$22b in 2023, which would reflect a stressful 33% reduction in Micron Technology's sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of US$0.12 in 2023, a sharp decline from a profit over the last year. Previously, the analysts had been modelling revenues of US$26b and earnings per share (EPS) of US$4.43 in 2023. So we can see that the consensus has become notably more bearish on Micron Technology's outlook with these numbers, making a substantial drop in this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

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NasdaqGS:MU Earnings and Revenue Growth September 30th 2022

The consensus price target fell 7.3% to US$69.03, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Micron Technology, with the most bullish analyst valuing it at US$110 and the most bearish at US$45.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 33% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 3.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.2% per year. It's pretty clear that Micron Technology's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Micron Technology dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Micron Technology's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Micron Technology.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Micron Technology analysts - going out to 2025, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

What are the risks and opportunities for Micron Technology?

Micron Technology, Inc. designs, develops, manufactures, and sells memory and storage products worldwide.

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Rewards

  • Price-To-Earnings ratio (10.6x) is below the US market (15.6x)

  • Earnings are forecast to grow 58.78% per year

Risks

  • Significant insider selling over the past 3 months

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