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Supply-Chain Issues to Hurt Micron's (MU) Q3 Earnings Growth

Zacks Equity Research
·4-min read
Micron (MU) May Get More Than $6B to Set Up Factories in the US

Micron Technology MU will report its third-quarter fiscal 2022 results after market close on Jun 30.

Micron’s third-quarter results are likely to benefit from the solid memory chip demand across all its end markets. The pandemic-led work-and-learn-from-home trend has fueled the significant demand for personal computers (PCs) and notebooks.

The remote-working and online-learning trend amid the COVID-19 crisis has also stoked the demand for cloud storage. Furthermore, lockdowns and social distancing measures have fueled the usage of online and e-commerce services globally, compelling data center operators to enhance their capacities to accommodate the demand spike for cloud services. All these factors are likely to have aided MU’s top line during the quarter under review.

However, supply-chain constraints at the company’s end, as well as component shortages at customers’ end, are likely to have weighed on sales and earnings growth.

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The Boise, ID-based semiconductor company posted more than 25% year-over-year top-line growth, while its non-GAAP earnings registered a more than 100% increase in each of the trailing four quarters. However, the Zacks Consensus Estimate for third-quarter revenues and non-GAAP earnings of $8.69 billion and $2.45 per share suggests a year-over-year increase of 17.1% and 30.3%, respectively.

Micron Technology, Inc. Price and EPS Surprise

Micron Technology, Inc. price-eps-surprise | Micron Technology, Inc. Quote

Component Shortages to Hurt Q3 Performance

Industry-wide component supply constraints are expected to have hurt Micron’s top and bottom lines in the third quarter. MU is witnessing supply constraints for certain integrated circuit components, which are expected to have negatively impacted bit shipments in the quarter under review.

Micron’s exposure to PCs and notebooks might have hurt its overall sales growth in the quarter under review. PC and notebook manufacturers are adjusting their memory and storage purchases due to the shortage of other components to complete PC assembling.

Additionally, operating expenses are expected to have flared up during the fiscal third quarter due to the resumption of previously delayed fiscal 2021 salary hikes. This might have hurt this Zacks Rank #4 (Sell) company’s margins and profitability during the quarter under review.

Stocks to Consider

Some better-ranked stocks worth considering from the broader technology sector are ON Semiconductor ON, Analog Devices ADI and MaxLinear MXL. While ON sports a Zacks Rank #1 (Strong Buy), Analog Devices and MaxLinear each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ON's second-quarter 2022 earnings has been revised to $1.26 per share from $1.05 over the past 60 days. For 2022, earnings estimates have moved north by 17.5% to $4.91 per share in the past 60 days.

ON's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 2.8%. Shares of ON have plunged 20.2% year to date (“YTD”).

The Zacks Consensus Estimate for Analog Devices' third-quarter fiscal 2022 earnings has been revised upward by 24 cents to $2.42 per share over the past 60 days. For fiscal 2022, earnings estimates have moved north by 9.6% to $9.24 per share in the past 60 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.7%. Shares of ADI have decreased 14.3% YTD.

The Zacks Consensus Estimate for MaxLinear's second-quarter 2022 earnings has been revised upward by 10 cents to $1.02 per share over the past 60 days. For 2022, the Zacks Consensus Estimate for MaxLinear's earnings has moved north by 36 cents to $4.07 per share in the past 60 days.

MaxLinear's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 9.6%. Shares of MXL have plunged 53.2% YTD.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Analog Devices, Inc. (ADI) : Free Stock Analysis Report
 
Micron Technology, Inc. (MU) : Free Stock Analysis Report
 
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ON Semiconductor Corporation (ON) : Free Stock Analysis Report
 
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