December 22, 2021 8:00 AM
 — 
3
 min

Micron triples its quarterly profit and improves its annual forecast

buy

Micron Technology almost tripled its net profit in the first fiscal quarter of 2022, which ended on December 2, and revenue by 33.3% yoy, which was better than analysts' forecasts. Micron's quarterly revenue jumped to $ 7.69 billion from $ 5.77 billion, while the market forecast estimated the figure at $ 7.68 billion, and management predicted $ 7.65 billion. Nevertheless, revenue growth slowed slightly, which happened for the first time in a year. In the previous fiscal quarter, this figure increased by 36.6% over the previous year.

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Net income for the quarter was $ 2.31 billion, or $ 2.04 per share, compared to $ 803 million, or $ 0.71 per share, for the same quarter in the prior fiscal year. Earnings excluding one-off factors increased to $ 2.16 per share from $ 0.78 per share against market expectations of $ 2.1 per share. According to the forecast of Micron's management, in the current quarter its profit, excluding one-time factors, will be $ 1.85-2.05 per share, revenue - $ 7.3-7.7 billion, while the market consensus assumes an increase in the indicator to $ 7.29 billion. in revenue and earnings of $ 1.84 per share.

The management of the company said that the problems in the global supply chains are expected to ease in 2022, so the year will be strong for the company. According to the company's forecast, the demand for DRAM memory chips in 2022 will grow by 15-19% yoy, for NAND chips - by about 30%. DRAM chips accounted for 73% of Micron's revenue in the last quarter ($ 5.59 billion), sales of NAND chips accounted for 24% of revenue ($ 1.89 billion). We were impressed by the company's financials and positively impressed by the management's outlook for the current year, so we are raising our target price forecast for Micron from $ 99 to $ 101.

Micron Technology, founded in 1978 and headquartered in Boise, Idaho, is one of the world's leading manufacturers of memory technologies specializing in DRAM, NAND flash and NOR flash memory products. It also provides packaging solutions and semiconductor systems. Micron has grown both organically and through acquisition, with the acquisition of Elpida in 2013 bolstering its position in DRAM. Sales of DRAM, NAND and NOR/Other account for ~72%, ~25% and 3% of FY21 sales, respectively, and we estimate MU sells into compute/ graphics (30% of sales), mobile (20%), SSDs/storage (20%), automotive, industrial, medical and other embedded (10%), server (10%) and resales/other markets (10%). The top 3 customers include: Kingston (10%), INTC (8%) and HP (9%). MU’s products are marketed through an internal sales force and distributors primarily to OEMs and retailers globally.

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