tiprankstipranks
SMART Global: is Another Strong Quarter in the Cards?
Stock Analysis & Ideas

SMART Global: is Another Strong Quarter in the Cards?

SMART Global Holdings, Inc. (SGH), a semiconductor chip manufacturer, will report its fiscal second-quarter 2022 earnings on April 5, after market hours.

The three primary businesses that generate revenue for the corporation are Intelligent Platform Solutions (IPS), LED Solutions, and Memory Solutions.

Notably, SMART Global had solid financial results in the fiscal first quarter, with both the top and bottom lines increasing from the year-ago quarter. Revenues surged by 61% to $470 million, with adjusted earnings of $2.16 per share surging 177% year-over-year.

The stock has been quite volatile recently, falling over 32% since the beginning of the year. Solid Q2 results, on the other hand, could enhance the stock price to some extent, so let’s see how the company is slated to perform this quarter.

Q2 Expectations

Experts predict that SMART Global will announce adjusted earnings of $0.72 per share in the second quarter. On a year-over-year basis, the figures show a 64% increase.

Analyst’s View on Q2 Results

Ahead of the fiscal second-quarter earnings announcement, Kevin Cassidy of Rosenblatt Securities, a top analyst, continues to feel that SMART Global is one of his “top long ideas for 2022.”

According to the analyst, SGH is expected to report a “slight beat-n-raise quarter” in Q2, driven by strength in the data center and networking areas. However, owing to seasonality, he anticipates segmental revenues to drop sequentially.

Nonetheless, he believes that the burgeoning Artificial Intelligence (AI) sector would aid the company to regain momentum in the near future. In this context, Cassidy writes, “We see a growing importance for its IPS and Memory Solutions products and services as the ‘Age of AI Scaling’ demands new architectures to address the hyper-growth in performance requirements.”

As a result, Cassidy kept his Buy rating on the stock and set a price target of $50, implying a nearly 41% gain by the end of next year.

Analyst Rating Consensus

On TipRanks, Smart Global commands a Strong Buy consensus rating based on five unanimous Buys. As for price targets, the average SGH stock price prediction of $42.50 implies more than a 72% upside potential from the current levels.

Bottom Line

Smart Global is an attractive stock with a diverse product portfolio and good execution. In recent quarters, the company’s margins have risen significantly, owing to a favorable combination of software and services. Furthermore, the company has a track record of producing good outcomes, and if it can sustain that growth pace in the future, investors could benefit significantly.

For now, it will be intriguing to see how the company performs in the upcoming second quarter.

Download the TipRanks mobile app now

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Read full Disclaimer & Disclosure

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles