Micron (MU) is scheduled to report results of its fiscal first quarter after the market close on Wednesday, December 21, with a conference call scheduled for 4:30 pm ET. What to watch for:

GUIDANCE: Along with its last report, Micron guided for Q1 adjusted earnings per share of 4c, plus or minus 1c, on revenue of $4.25B, plus or minus $250M. At the time, analysts were expecting the company to report Q1 earnings of 64c on revenue of $5.62B, but those figures have since fallen to (1c) and $4.11B, respectively.

OUTLOOK WEAKENED: In mid-November, Micron said that, in response to market conditions, it had opted to reduce DRAM and NAND wafer starts by approximately 20% versus fiscal fourth quarter 2022. These reductions will be made across all technology nodes where Micron has meaningful output. Micron is also working toward additional capex cuts. In calendar 2023, Micron now expects its year-on-year bit supply growth to be negative for DRAM, and in the single-digit percentage range for NAND. Recently, the market outlook for calendar 2023 has weakened. In order to significantly improve total inventory in the supply chain, Micron believes that in calendar 2023, year-on-year DRAM bit supply will need to shrink and NAND bit supply growth will need to be significantly lower than previous estimates.

CITI: Citi analyst Christopher Danely maintained a Buy rating on Micron Technology ahead of the fiscal Q1 results Wednesday, saying he expects the company to report and guide below consensus estimates "given the DRAM collapse." However, the reasons to be positive on Micron remain unchanged, Danely tells investors in a research note. He believes capex and utilization cuts by Micron and Hynix "should create a bottom" in Q1 of 2023 and says Micron is trading close to a "trough valuation."

DEUTSCHE BANK: Earlier this month, Deutsche Bank analyst Sidney Ho downgraded Micron Technology to Hold from Buy with a price target of $55, down from $60. The analyst is "incrementally more cautious" on the memory market, as he believes the current downturn will last longer and be more severe than we previously forecasted. On the demand side, weakness in consumer PC and smartphone has now spread to the enterprise side, and "even cloud demand is starting to weaken," Ho tells investors in a research note. On the supply side, Samsung's unwillingness to cut back on spending and production will likely prolong the downturn, says the analyst. When combined with elevated inventory levels, he sees Micron generating net losses for the entire year in 2023. As such, Ho believes the stock's risk/reward at the current level is balanced.

MEGAFAB: In early October, Micron announced plans to build a new "megafab" semiconductor fabrication facility in Clay, New York. The company to invest up to $100B over the next 20-plus years to construct the new megafab, with he first phase investment of $20B planned by the end of this decade.

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