As you might know, Micron Technology, Inc. (NASDAQ:MU) just kicked off its latest third-quarter results with some very strong numbers. Micron Technology beat earnings, with revenues hitting US$5.4b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 11%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Micron Technology
Taking into account the latest results, the consensus forecast from Micron Technology’s 33 analysts is for revenues of US$24.9b in 2021, which would reflect a huge 23% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 122% to US$4.52. In the lead-up to this report, the analysts had been modelling revenues of US$24.4b and earnings per share (EPS) of US$4.15 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.
Despite these upgrades,the analysts have not made any major changes to their price target of US$63.15, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Micron Technology analyst has a price target of US$100.00 per share, while the most pessimistic values it at US$35.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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. The analysts are definitely expecting Micron Technology’s growth to accelerate, with the forecast 23% growth ranking favourably alongside historical growth of 13% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.5% next 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$63.15, with the latest estimates not enough to have an impact on their price targets.
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. We have forecasts for Micron Technology going out to 2022, and you can see them free on our platform here.
Even so, be aware that Micron Technology is showing 1 warning sign in our investment analysis , you should know about…
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.
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