Micron Stock Widens Quarterly Loss After Forecast

Micron gave weaker-than-expected current-quarter guidance

Sep 21, 2018 at 10:00 AM
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Micron Technology, Inc. (NASDAQ:MU) reported a fiscal fourth-quarter adjusted profit of $3.53 per share on $8.44 billion in revenue -- more than analysts were expecting. However, the chipmaker gave weaker-than-expected current-quarter guidance, while Chief Financial Officer Dave Zinsner warned of the cost of the U.S.-China trade dispute, saying "gross margins will also be impacted in the near term by the announced 10% tariff on $200 billion of imports from China, which will go into effect on Sept. 24."

Analysts were quick to chime in after Micron's results, too, with no fewer than eight brokerage firms cutting their price targets on the stock. Morgan Stanley set the lowest bar, slashing its MU price target by $17 to $48, while Barclays noted investors are still cautious on oversupply concerns.

Against this backdrop, MU stock is down 3.4% to trade at $44.48, but finding support near the site of its Sept. 6 bear gap. Nevertheless, Micron shares have been in a channel of lower highs and lows since their late-May peak near $65, and are pacing for their first quarterly loss since March 2016 -- down 14.5% so far.

MU options traders were busy at the jump, with 58,000 calls and 32,000 puts on the tape within the first 10 minutes of today's trading. Speculators appear to be liquidating their positions at the October 45 call and weekly 9/28 46-strike puts, both of which seem to be seeing sell-to-close activity.

More broadly speaking, the October 55 call has seen the biggest increase in open interest over the last 10 days, with nearly 39,000 contracts added. Data from the major options exchanges confirms mostly buy-to-open activity here, suggesting options traders are betting on a big bounce for MU shares by October options expiration.

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