Micron Technology Inc. shares are trading lower Wednesday after the company released its fiscal second-quarter earnings report, despite the fact that the report itself was largely positive.
Why the stock is moving
Expectations are high, and Micron isn’t topping estimates to the degree that it used to. While the memory-chip maker beat on both earnings and revenue, analysts were looking for a bigger beat, particularly after Micron’s strong guidance last month.
“The market was expecting a bigger beat and raise,” said Wedbush analyst Matt Bryson. “Micron’s guidance was already pretty good, so the bar was high.”
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The company’s guidance for the fiscal third quarter was also in line with expectations, which further dampened enthusiasm.
“We believe Micron is well-positioned to benefit from long-term secular trends in memory and storage, but near-term headwinds remain,” said Truist analyst William Stein in a note to clients. “We are maintaining our Hold rating.”
What Micron reported
Micron reported fiscal second-quarter earnings of $2.03 per share on revenue of $7.42 billion. Analysts surveyed by FactSet were expecting earnings of $1.79 per share on revenue of $7.28 billion.
The company’s guidance for the fiscal third quarter is for earnings of $1.70 per share on revenue of $7.6 billion. Analysts were expecting earnings of $1.70 per share on revenue of $7.6 billion.
What analysts are saying
Analysts are generally positive on Micron’s long-term prospects, but they are also cautious about the near-term headwinds facing the company.
“We believe Micron is a well-managed company with a strong competitive position in the memory market,” said Morgan Stanley analyst Joseph Moore in a note to clients. “However, we are concerned about the potential for a slowdown in demand for memory chips.”
Shares of Micron were down 2.3% in premarket trading Wednesday.