Micron Technology Inc.
MU
is scheduled to report second-quarter fiscal 2021 results on Mar 31.
The company’s performance in the soon-to-be-reported quarter is likely to have gained from strong memory-chip demand from PC manufacturers, smartphone makers and data-center operators.
Robust Memory Chip Demand
The COVID-19 pandemic-induced lockdown and social-distancing measures are spurring demand for PCs and notebooks as more and more workers and students are now working and learning from their homes. This trend is likely to have continued in the fiscal second quarter as well, thereby aiding its top-line performance.
Per IDC data, fourth-quarter 2020 (October-December)
PC shipments
grew 26.1% to 91.6 million units. Lenovo was the top vendor, followed by
HP Inc.
HPQ
, per IDC. Further, the market research firm
forecasts
18.2% year-over-year PC shipment growth in 2021.
Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. price-consensus-chart
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Micron Technology, Inc. Quote
The work-and-learn-from-home necessity is also stoking demand for cloud storage. Furthermore, the social-distancing trend has boosted the usage of online services globally. Therefore, data-center operators are enhancing their cloud-storage capacities in a bid to accommodate the skyrocketing demand for cloud services, which is fueling demand for memory chips.
Per the IDC data, fourth-quarter 2020
server sales
were impressive, which is anticipated to have aided Micron. Notably,
Dell Technologies
DELL
and
Hewlett Packard Enterprises
HPE
were ranked as the top vendors by IDC.
Moreover, solid recoveries in sales across the smartphone and automotive industries are likely to have supported Micron’s overall financial performance during the quarter under review. According to the latest forecast by
Gartner
, worldwide sales of smartphones will likely be up 11.4% year over year to 1.5 billion units in 2021. This suggests a sharp improvement from the 10.5% decline registered in 2020.
Product wise, Micron’s quarterly DRAM revenues are likely to have improved year over year. The Zacks Consensus Estimate for DRAM revenues is currently pegged at $4.31 billion, indicating a 39.8% year-over-year jump.
Revenues from NAND products are likely to have slightly improved to $1.57 billion when compared with the year-ago quarter sales of $1.51 billion.
Nonetheless, Micron’s heavy dependence on China is a headwind due to the long-standing tit-for-tat trade spat between the United States and China. Restrictions on exports to Huawei might have hurt the top-line performance of this Zacks Rank #2 (Buy) company during the period in discussion.
You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
In addition, higher mix of lower-margin NAND, along with low memory prices and minimal decline in manufacturing costs, is likely to have strained margins.
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