Proactive Investors - Micron Technology, Inc. (NASDAQ:MU) on Tuesday raised its first quarter fiscal 2024 revenue guidance but investors pulled back on the stock after it projected higher expenses for the period.
For the quarter ending November 30, 2023, the semiconductor company upped its revenue guidance from its prior range of $4.2 billion to $4.4 billion to approximately $4.7 million.
It also expects its adjusted gross margins will approach breakeven during the quarter due to an improved supply and demand balance and better pricing. It had previously expected gross margins in the range of negative 6% to negative 2%.
However, Micron now expects operating expenses of approximately $990 million, above its prior forecast range of $875 million to $915 million.
Analysts at Wedbush noted that the updated revenue guidance fit with their view on the company.
“We noted post-Micron’s fiscal fourth quarter earnings call that we see Micron’s outlook as being extremely conservative and that in our view Micron is set to meaningfully exceed management’s forecast,” they wrote in a note to clients.
But they added that they would not have been surprised by an even more positive update, particularly around earnings expectations, in light of how strong memory markets have been.
“Part of the explanation is tied to Micron’s operating expenses coming in at significantly higher than previously guided levels (up 10% from the initial guide),” they wrote.
“We would note that Micron’s quarter includes a weaker September month and we would also not be surprised if management left some margin to allow for upside even to the revised guide.”
The analysts have an ‘Outperform’ rating on the stock and a US$80 price target.
“With conditions in memory markets improving, we continue to like Micron (and the broader sector) as we expect financials will show substantial progress over the next few quarters, with shortages (and traditional peak cycle conditions) likely appearing in our view later in 2024 as standard server demand normalizes,” the analysts concluded.
Micron shares traded down 3% at US$75.17 on Tuesday afternoon.