With just a few days left until Santa comes, shares of Micron Technology Inc (NASDAQ: MU) are set to give investors an early Christmas present. They jumped 5% in last night’s after-hours sessions off the back of the company’s fiscal Q1 earnings, which smashed analyst expectations. It was a strong report all around and should be more than enough to power shares up to fresh highs for 2023 by the end of next week.
Looking at the specifics, both headline numbers topped expectations, with revenue for the quarter up a full 15% year on year and non-GAAP EPS showing a smaller loss than most were anticipating. To deliver beats here was particularly impressive as the company had only just raised their guidance on Q1’s numbers a few weeks ago.
Bullish outlook
Switching from last quarter’s performance to the coming quarters, it only got better. For their Q2 report, Micron is now forecasting revenue to land around $5.30 billion versus the previous consensus of $5.05 billion, while EPS should come in around $0.28 versus a consensus of -$0.61.
Boosting forward guidance like that is always a surefire way to get investors excited and send shares up. While they still have a ways to go before they’ll be printing fresh all-time highs, last night’s report will come to be looked back upon as a key step in that journey.
Micron took the opportunity also to emphasize their expectations of improved fundamentals for the business and semiconductor industry heading into, and through 2024. Much of this optimism comes from the company’s industry-leading products used for data center AI applications, with demand only set to increase from here. Beyond the data center angle, Micron is also well positioned to capitalize on other opportunities across a spectrum of industries, with the smartphone market, in particular, singled out as an area of focus heading into 2024.
It’s a strong statement that will end a year that’s been all about recovery. Micron shares had lost 50% of their value heading into the final week of last year, but after tagging a low then, it’s been only one-way traffic. They’re currently up more than 60% since, and expectations are high for this rally to continue.
High expectations
Ahead of last night’s report, there had been a run of bullish comments from the analysts. Bank of America, for example, upped their rating on the stock from Neutral to Buy only last week. Then, on Monday, the team at Wedbush upped their price target on the stock from $80 to $95, a strong statement that points to further upside from last night’s close of at least 20%. It was a move echoed by TD Cowen, who upped their price target to $100. If Micron shares to hit this in the coming weeks, they’d be at fresh all-time highs.
So, for those of us on the sidelines and considering getting involved, there’s a lot to like about Micron right now. They’re set to round out a great year with a strong report and a bullish outlook that just keeps getting better. The Fed looks to have won the battle with inflation, and expectations are increasing for a rate cut next year, which will only further fuel the rally, while the S&P 500 index is close to a new high of its own.
Overall, the risk-on sentiment currently sweeping equities hasn’t been this good in years, and it’s in times like this that growth-focused tech names like Micron tend to outperform all others. Investors should look for shares to trade and close above last week’s high of $83, as this would confirm the next stage of the rally has started. The two double tops from 2021, around the $100 level, would then become the next big target, with blue sky country awaiting them beyond there. All things being fair and equal, 2024 could be Micron’s best yet.
