Breaking: My Top Memory Play Smashes Q3 Expectations

I’ve had June 29 circled on my calendar in anticipation of this moment. My favorite memory chip maker just reported stunning sales and earnings growth for the third quarter.

Micron Technology (MU) is one of the largest and best established producers of memory chips. Micron’s specialty is in dynamic random access memory (DRAM) products for data storage and retrieval (including high-speed and high-bandwidth) and specialty DRAM products used in computers, servers, tablets, mobile phones, communication equipment, computer peripherals, industrial, automotive and other electronic devices. DRAM accounted for about 60% of the company’s revenue last year.

And as I write this, Micron is making headlines with its third-quarter report. Last quarter, Micron Technology earned $1.90 billion, or $1.62 per share, on $5.57 billion in revenue. This trounced the consensus estimate of $1.51 EPS on $5.41 billion in revenue, representing a 7.3% earnings surprise and a 3.0% sales surprise.

To put things into perspective, last year Micron posted a net loss of $29 million, or a loss of $0.03 per share, on just $2.90 billion in revenue. So Micron turned a profit and posted 92% annual sales growth for Q3 2017. According to management, Micron benefitted from rising DRAM prices and higher NAND sales volumes. The company also ramped up capital spending, making $1.27 billion in expenditures last quarter.

Micron also released a bullish guidance for the fourth quarter. The company is targeting EPS between $1.73 and $1.87, which is well above the Street view of $1.57 EPS. Micron also expects revenue to range between $5.70 billion and $6.10 billion, compared with analysts’ estimates for $5.62 billion.

This was a tremendous report, and I expect that analysts will revise their forward sales and earnings forecasts higher in the coming weeks. In the meantime, I consider MU an A-rating Strong Buy.

Sincerely,

Signed Louis Navellier

Louis Navellier

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