Micron Stuck in Neutral Ahead of Earnings

Micron Technology Inc. (MU) reports Q2 2021 earnings after Wednesday’s U.S. opening bell, with analysts looking for a profit of $0.96 per-share on $5.6 billion in revenue. If met, earnings-per-share (EPS) will mark a 113% profit increase compared to the same quarter last year. The stock closed lower in January despite beating Q1 2021 top and bottom line estimates and raising Q2 guidance, but recovered quickly and continued the uptrend into early March.

Micron Ceases 3D XPoint Development

The memory giant raised Q2 profit and revenue guidance again on Mar. 3 but the news failed to attract fresh buying interest, yielding a trading range that violated the 50-day moving average for the first time since October 2020 last week. Semiconductor sentiment has deteriorated since news of a worldwide shortage hit the headlines, contributing to massively overbought technical readings generated by 2020’s outsized 52% return.

Micron shifted technical focus last week, adjusting its portfolio strategy to focus on Compute Express Link (CXL), the recently introduced standard for communication between computation, memory, and storage. The company is also ceasing the development of 3D XPoint, a non-volatile memory technology developed jointly with Intel Corp. (INTC) for use in solid state drives (SSDs). The technology has received a lukewarm reception despite high marks by reviewers.

Wall Street and Technical Outlook

Wall Street consensus stands at a ‘Buy’ rating based upon 28 ‘Buy’ and 6 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $80 to a Street-high $150 while the stock closed Friday’s session just $8 above the low target. This humble placement highlights deterioration in investor sentiment since 2020’s strong advance.

Micron topped out in the 60s in the first quarter of 2018, giving way to a broad consolidation, followed by a November 2020 breakout that ran out of steam at 95.75 on Mar. 1. Unfortunately, that print is less than two points under September 2000’s all-time high at 97.50, which marks major resistance despite the 21-year time span. Looking back, hundreds of tech stocks have spent months or years grinding against this historic barrier before breaking out.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.