Earnings preview for Wednesday (MU)

Rising prices for DRAM and NAND memory may slow in Micron's fiscal 4Q before a buying spree in servers and PCs, driven by cloud and corporate IT customers. Growth of 2021 smartphone shipments also helps. BI's scenario analysis for Micron's 3Q sales is based on 15% DRAM price increases and 5% higher gigabyte shipments, with NAND prices rising 3% and 6% gigabyte growth. In the long term, Micron's SSD qualifications with larger OEMs and portfolio optimization will continue to improve gross margin. Near-term constraints on component supply may hinder sales upside even as 2021 sales and gross-margin views have been revised higher by 12-17% in the past six months.Our scenarios are modestly higher than consensus for 3Q revenue of $7.3 billion and 4Q sales of $8.1 billion. EPS of $1.69 in 3Q and $2.13 in 4Q are nearly in-line.

--Bloomberg analyst Anand Srinivasan & Marina Girgis