Micron Earnings Preview—Huge 11% Move Expected Wednesday

Will the company beat $1.77 EPS estimates and join the semiconductor surge?

• Micron Technology will report quarterly earnings after the market closes on Wednesday.
• The company’s stock price could have a huge expected move of over 11% for this week's earnings announcement.
• The stock is up on the year but down significantly from highs realized this summer.
• After posting strong earnings numbers four quarters in a row, Micron is expected to report earnings per share of $1.77 on $8.71 billion in revenue.

In the past few weeks, Marvell Technology (MRVL) and Broadcom (AVGO) reported quarterly earnings, and the stock prices are surging. In a few days, Micron Technology (MU) will report quarterly earnings, and estimates are sky high. Last quarter, Micron reported earnings-per-share (EPS) of $1.18 on $7.75 billion in revenue, and both figures beat estimates.

On Wednesday, Micron is expected to report an EPS of $1.77 on $8.71 billion in revenue. These are huge earnings estimate increases, and the stock market is pricing in a lot of uncertainty around MU stock this week. The semiconductor business has benefited from increased demand across the board, and in a few days we will see if Micron will join the party.

MU stock opened the year at $84 per share, and currently sits around $110—up over 30% on the year. While that is a great return in a vacuum, it doesn't tell the whole story because the stock recahed $157.53 in June. With the competative landscape booming after strong earnings reports, Micron is up almost 7% on today to begin the week.

In last quarter's earnings report, the company said that “Micron’s fiscal 2024 revenue grew over 60%, we expanded company gross margins by over 30% and achieved revenue records in data center and in automotive."

Optimism for the future prevailed in that same report: ”We look forward to delivering a substantial revenue record with significantly improved profitability in fiscal 2025, beginning with our guidance for record quarterly revenue in fiscal Q1."

But momentum can cause pressure—and that’s manifested here in the sky high earnings estimates for this Wednesday's announcement.

Looking at the implied volatility of the options market, we can put context around expected stock price moves for different timeframes.

Looking at this week, we can see a +/-$ 12.93 stock price expected move. This is well over 10% of the notional value of the stock price, which puts it near the highest earnings expected moves for the quarter—most companies fall within the 5%-10% range.

Looking to March of 2025, we can see an expected move of +/- $22.01, which means this week's earnings announcement has great weight because it makes up over 50% of the expected move through March of next year.

The IV Rank for MU stock is also very high at around 85, meaning the current level of implied volatility is near the high we've seen over the past 52 weeks. That’s just another bit of context confirming the heightened implied volatility environment in Micron.

All eyes will be on the company on Wednesday for their announcement after the close.

Bullish on MU stock for earnings

If you're bullish on MU stock for earnings, you want to see an EPS and revenue beat. Not only that, you'll want to hear strong bullish guidance for next year while the sector enjoys increased demand. Heightened earnings expectations are one thing, but exceeding those heightened expectations is another.

Bearish on MU stock for earnings

If you're bearish on MU stock for earnings, you want to see an earnings miss and some questionable guidance for 2025. We've already seen competitors in Broadcom and Marvell flourish after their earnings reports. Does that mean they've taken market share away from Micron? Or is it a boost to the general sector?

Tune in to Options Trading Concepts Live oat 11 a.m. CST Wednesday for an in-depth look at options strategies ahead of the earnings report.

Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb  

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro. 

Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.