09:20 AM EDT, 03/17/2025 (MT Newswires) -- Micron Technology's ( MU ) fiscal second-quarter margins could come in at the lower end of its guidance, but favorable trends are likely to boost the semiconductor manufacturer's results going forward, Wedbush Securities said in a Monday client note.

During an investor conference last month, Chief Financial Officer Mark Murphy reiterated the company's second-quarter outlook provided in December. Micron expects adjusted per-share earnings of $1.43, plus or minus $0.10, and revenue of $7.9 billion, plus or minus $200 million. Adjusted gross margin was pegged at 38.5%, plus or minus 1%, for the quarter.

Wedbush sees some "modest potential deviation" compared with its current estimates for the company, as softer pricing for the DRAM and NAND memories in the first quarter of 2025 could push Micron's margins to the lower end of its initial forecast. However, an increase in client device secondary market-related demand in February could drive "somewhat better" bit shipments, according to the brokerage.

Micron is scheduled to release its latest quarterly results after the markets close Thursday. The current consensus on FactSet is for the company to post non-GAAP EPS of $1.43 and revenue of about $7.9 billion.

Murphy told analysts during last month's conference event that the company expects revenue growth in the third quarter and gross margin to be down by a "few hundred basis points" on a sequential basis. "This is primarily due to higher mix of consumer-related or consumer-oriented mix in (the fiscal third quarter), lower (calendar first-quarter) consumer-oriented pricing and NAND - overall or broader NAND industry conditions," Murphy said at the conference, according to a FactSet transcript.

Wedbush estimates a 260-basis-point decline in Micron's gross margins with a "modest lift" in revenue.

Micron is expected to see memory demand closely aligned with end market fundamentals with memory inventories at several client device original equipment manufacturers stabilizing, according to Wedbush. The brokerage anticipates generally strong demand to benefit Micron's high-bandwidth memory results, while normalization of server shipments to the emerging cloud and artificial intelligence customers is projected to boost high-capacity enterprise solid state drive demand.

Hyperscale spending growth this year should moderate any "blip" in memory dynamics seen in the first quarter of 2025 and the final quarter of 2024, Wedbush added.

Wedbush remains positive about Micron's future prospects as it believes conditions are likely to improve in the second half while acknowledging that US tariffs do create some incremental risk.

The brokerage maintained its outperform rating on Micron's stock with a 12-month price target of $125.