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The Rise and Fall of Micron Stock after Its Fiscal Q3 Earnings

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Micron’s fiscal Q3 earnings highlights

Micron Technology (MU) delivered record fiscal third-quarter[1. fiscal Q3 2018 ended May 31] earnings and guidance on June 20, beating analysts’ estimates by a good margin. It even beat its midpoint guidance after revising it upward in May.

Not only did Micron report better-than-expected earnings guidance, it also turned net cash positive one quarter before its target. This position is achieved when the company’s total cash reserves exceed its total debt.

During the company’s fiscal third-quarter earnings call, Micron’s CEO, Sanjay Mehrotra, noted that the memory market has undergone a structural change that has reduced its cyclicality and made demand more secular.

Most Wall Street analysts became bullish on Micron and raised their price targets for the stock over the anticipation of strong earnings continuing in fiscal 2019.

Stocks react to Micron’s fiscal Q3 earnings

Micron’s better-than-expected guidance and net-cash-positive position made investors slightly bullish and sent Micron’s stock price up 4.4% at the start of trading on June 21. This guidance showed a strong memory market environment for the next quarter as well.

As a result, the stock prices of memory manufacturing equipment suppliers Lam Research (LRCX) and Applied Materials (AMAT) rose ~2.0% at the start of the trading session on June 21. NAND (negative AND) maker Western Digital’s (WDC) stock price also rose ~3.0% on Micron’s earnings.

However, these stocks corrected over the day and ended the trading session slightly above the previous day’s close. This happened partially because some Wall Street analysts expressed caution about downside risk expected in calendar 2019 and partially because many traders looked to cash in on the increase. With every earnings report, the stock peaks before the earnings announcement and then slides slightly as speculators and traders take profits.

In this series, we’ll see what Micron’s fiscal third-quarter earnings mean to investors.

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