Stocks: Investors Watch Micron Earnings As Chip Producers' Shares Soar -- WSJ
December 18 2019 - 03:02AM
Dow Jones News
By Amrith Ramkumar
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 18, 2019).
Earnings from one of the semiconductor industry's most popular
stocks will test the group Wednesday, a potential hurdle for one of
the biggest beneficiaries from thawing trade tensions.
Quarterly results from Micron Technology Inc. are due Wednesday
afternoon. They arrive as shares of the memory-chip maker and
broader sector are surging after the U.S. and China reached an
initial trade pact late last week. Shares of Micron have rallied
12% in the past week, bringing their advance for the year to
67%.
The PHLX Semiconductor Index has advanced 6.1% this month and
57% in 2019, heading for its largest annual gain in a decade.
Shares of semiconductor firms Advanced Micro Devices Inc. and Lam
Research Corp. have more than doubled, making them the S&P
500's best performers this year.
Driving the gains are wagers that more robust global trade and a
pickup in economic activity will lift demand for chips, sopping up
a glut that has weighed on prices and dented profits for firms such
as Micron recently. Some analysts also are hopeful that limited
supply from industry stalwarts will fuel a rebound next year.
Those bets and recent gains in chip stocks will increase
scrutiny of Micron's projections for coming quarters, with sales
expected to log a sharp decline for the quarter ended in November.
During the three-month period ended in August, revenue fell about
40% from a year earlier, and analysts anticipate a similar slide
for the most recent quarter, according to FactSet.
Still, Wall Street expects Micron's sales to rebound next year,
putting more attention on the company's commentary following the
"phase one" trade deal between the world's two largest
economies.
"When I look at 2020, I believe that the industry demand/supply
environment will be in a lot healthier place," Micron Chief
Executive Sanjay Mehrotra said on the firm's most recent earnings
call in late September.
Another reason investors will be focused on the company's
results is that they come during a lull in the earnings and
economic calendar. Fourth-quarter reporting season kicks off for
most large companies in mid-January, and there are few major
economic releases on Wednesday and Thursday.
That means any notable results that ripple to highflying
semiconductor stocks could have an outsize impact on market
momentum.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
December 18, 2019 02:47 ET (07:47 GMT)
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