The company's results for the first quarter of fiscal 2023 show that things will get worse for the chipmaker. The memory specialist's most recent quarter, which concluded on December 1, showed a dramatic fall in revenue and a shift to a loss from a profit in the comparable prior-year period.
According to the forecast for the upcoming quarter, difficult times may persist for some time. However, management believes that once customers begin refilling chips in the middle of 2023, the fortunes of the memory business may begin to improve.
But because businesses in this sector are reducing investments and output in light of the weak demand, investors should anticipate that an improvement in the market for memory chips would result in improved profits. Smartphone sales are anticipated to pick up steam beginning in the second half of 2023, while PC sales are anticipated to rebound in 2024. The memory market is now experiencing rapid price drops, but these should lessen when demand increases and supply becomes constrained.
Investors in Micron should prepare for at least a few more quarters of falling sales and earnings. For the time being, analysts predict a fall in fiscal 2023 of 23% in revenue and 64% in adjusted earnings. However, after Micron's first-quarter projections largely fell short of Wall Street expectations, those predictions could need to be reduced even further.
However, they also anticipate that after the cyclical slowdown eventually ends in fiscal 2024, its revenue and adjusted EPS will increase. These predictions should be treated with caution, but they indicate that Micron's stock is significantly undervalued at just six times projected earnings.
Micron's stock will continue to face significant pressure in this challenging market. Still, until the DRAM and NAND markets recover, their technological leadership, financial stability, and attractive valuations should prevent further declines.
Despite the cyclical downturn and earnings miss, the stock price drop provides an attractive entry point for $MU.