Micron (MU) Earnings on Tap as End of Q4 Season Approaches

Our preview of the upcoming week's earnings reports includes Micron (MU), Lululemon (LULU) and Walgreens (WBA).

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Micron Technology (MU, $77.35) will headline this week's relatively bare earnings calendar, with the chipmaker slated to report its fiscal second-quarter results after Tuesday's close.

Analysts, on average, are anticipating earnings of $1.97 per share for the three-month period, up 101% on a year-over-year (YoY) basis. On the top line, the consensus estimate is for $7.5 billion – a significant improvement over the $6.2 billion MU reported in the year-ago period.

Wedbush analyst Matt Bryson recently upgraded the semiconductor stock to Outperform (Buy), saying DRAM pricing likely bottomed in the first three months of 2022.

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He believes Micron will meet or exceed fiscal second-quarter guidance. "We did not encounter any signs of MU pushing discounted inventory towards the end of the quarter, with the Boise manufacturer rather lifting terms for NAND bits as it benefitted from concerns about lost Kioxia/Western Digital (WDC) production," he says.

For context, production at a joint Kioxia/WDC 3D NAND fabrication facility in Japan was disrupted last month by chemical contamination.

Lululemon Stock Struggles Ahead of Q4 Earnings

Lululemon Athletica (LULU, $319.51) has not been immune to broad-market headwinds, with shares down around 18% for the year-to-date.

Can a solid earnings report help the consumer discretionary stock reverse course?

The athletic apparel maker will unveil its fourth-quarter earnings report after the March 29 close and analysts seem generally upbeat about the quarter. On average, Wall Street pros are calling for earnings of $3.28 per share (+27.1% YoY) and revenue of $2.1 billion, a 23.4% increase from year prior.

Deutsche Bank analyst Gabriella Carbone (Buy) is expecting a fourth-quarter beat and believes LULU will report above-consensus earnings of $3.31 per share, saying post-omicron sales trends improved in January.

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However, she'll be watching Lululemon's first-quarter and full-year guidance, which could come in below consensus estimates. "We think ongoing transit delays in North America will lead LULU to resort to air freight, which may pressure margins to a greater degree than anticipated," Carbone writes in a note.

Walgreens Vaccine Boost Solid to Start 2022, But Should Wane

Walgreens Boots Alliance (WBA, $47.17) is the last of the Dow Jones stocks to report this earnings season, with the pharmacy chain slated to unveil its fiscal second-quarter earnings after Thursday's close.

On average, analysts are looking for a 9.5% increase in earnings to $1.38 per share and a 1.8% rise in revenue to $33.4 billion.

"In a similar vein to last quarter, we expect a solid quarter as vaccine trends and over-the-counter testing volume related to the omicron variant are expected to yield a positive boost to earnings," says Credit Suisse analyst A.J. Rice. He has a Neutral rating on WBA, which is the equivalent of a Hold.

Walgreens has said that every 1 million vaccines distributed contributes roughly 2 cents per share to its bottom line and Rice estimates that the company administered 10 million shots in its fiscal second quarter. Looking forward, though, the analyst believes the vaccine benefit will begin to wane.

WBA's impending sale of its U.K. drugstore chain Boots could also be in focus when the company reports earnings. While several bidders have reportedly dropped out of the running, "headlines indicate that the sale process continues," Rice says.

Karee Venema
Senior Investing Editor, Kiplinger.com

With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.