SMART Global Holdings (SGH) designs and manufactures memory solutions for the electronics sector. DRAM (dynamic random access memory) and Flash memory technologies are among the company’s offerings.
Despite persistent macroeconomic headwinds, such as supply-chain restrictions and the crisis in Eastern Europe, the company recently posted strong fiscal second-quarter earnings.
Strong Q2 Results & Impressive Guidance
The company reported $449 million in revenue, up 48% year-over-year, thanks to growth in the intelligent platform solutions (IPS), memory solutions, and LED solutions segments. Further, on an adjusted basis, gross margins increased by roughly 660 basis points to 26%.
SMART Global nearly doubled its adjusted earnings to $0.87 per share from $0.44 per share in the year-ago quarter. In addition, the corporation forecast a positive outlook for the third quarter. Sales are expected in the range of $435 million to $475, which is higher than the $452 million average projection.
The results indicate that SMART Global is well-positioned to benefit from the increased use of its chips in growth areas, namely artificial intelligence (AI), machine learning, data analytics, enterprise storage, and the Internet of Things (IoT).
Expert Opinions
The company was given a Buy rating by the majority of Wall Street analysts, who were enthused with SMART Global’s Q2 results.
SMART Global is the “top pick” for the year 2022, according to Needham analyst Rajvindra Gill. He anticipates high revenue growth in the future driven by increasing demand in “data center, cloud applications, and ultra-scale supercomputing.”
He writes, “We believe SGH stands to benefit from the recovery in the memory cycle and the shift towards high-density, high-margin applications.”
As a result, the five-star analyst maintained a Buy rating on SGH stock and increased the price target to $45 from $42.50 per share.
Another analyst Kevin Cassidy of Rosenblatt Securities confirmed his buy rating on SGH and raised his price target to $60 from $50 per share. Cassidy writes, “The company is well-positioned for the increasing demand from end markets such as oil & gas, social media, and government.”
Analyst Consensus Rating
On TipRanks, Smart Global stock commands a Strong Buy consensus rating based on 4 unanimous Buys. As for price targets, the average SGH stock price forecast of $45.00 implies almost 86% upside potential from current levels.
Bottom Line
SMART Global’s growing portfolio of cutting-edge solutions is primed to take off in this technological era, making it an interesting prospect despite the hurdles.
In addition, the stock has sparked a lot of interest among investors. The investors holding portfolios on TipRanks maintain a very positive outlook on SGH stock. According to the statistics, 8.4% of these investors have boosted their SGH stock holdings in the last 30 days.
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