Investors in Micron Technology, Inc. (NASDAQ:MU) had a good week, as its shares rose 3.0% to close at US$77.42 following the release of its first-quarter results. It looks like a credible result overall – although revenues of US$5.8b were what the analysts expected, Micron Technology surprised by delivering a (statutory) profit of US$0.71 per share, an impressive 28% above what was forecast. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Micron Technology
Taking into account the latest results, the most recent consensus for Micron Technology from 27 analysts is for revenues of US$25.0b in 2021 which, if met, would be a decent 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to bounce 26% to US$3.41. In the lead-up to this report, the analysts had been modelling revenues of US$24.1b and earnings per share (EPS) of US$3.24 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
With these upgrades, we’re not surprised to see that the analysts have lifted their price target 22% to US$94.61per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Micron Technology, with the most bullish analyst valuing it at US$121 and the most bearish at US$60.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It’s clear from the latest estimates that Micron Technology’s rate of growth is expected to accelerate meaningfully, with the forecast 13% revenue growth noticeably faster than its historical growth of 11%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Micron Technology to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Micron Technology’s earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn’t be too quick to come to a conclusion on Micron Technology. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Micron Technology going out to 2023, and you can see them free on our platform here..
Before you take the next step you should know about the 1 warning sign for Micron Technology that we have uncovered.
Promoted
When trading Micron Technology or any other investment, use the platform considered by many to be the Professional’s Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
