SMART Global Holdings Inc. (NASDAQ: SGH) has confirmed the date for its fiscal Q1 2022 earnings release, which will be on Tuesday, January 4, 2021.
What to look for
SMART Global is expected to double its profits in the next few years, which is an amazing opportunity, and the market is priced in the stock's positive outlook. The company deals with the design, production, and sales of memory services and solutions in the electronics sector. It had a product line including Flash memory and DRAM technologies.
Earnings: Stockearning’s Estimated EPS is expected to range between $1 and $.4 per share for the current quarter under review. In the fourth quarter, the company reported GAAP EPS of $0.78, representing a YoY increase of 160%, and non-GAAP EPS of $2.16, up 163% YoY. Historical EPS Performance for the past 12 quarters indicates that the company had beat estimates seven times (58%) and missed five times (41%).
Revenue: In the fourth quarter, the company had net sales of $467.7 million, up 57% YoY, while net sales for the whole year were $1.5 billion, increasing 34% from fiscal 2020. For the fiscal Q1 2022, the company expected revenue to range between $440 million and $480 million.
Stock movement: SGH shares have gained 38.6% since the company released its Q4 2021. Interestingly, SMART Global shares have been UP 11 times out of the past 17 quarters. So, the historical price reaction suggests a 64% probability of the share price going UP once SGH reports its fiscal Q1 2022 earnings. According to the Stockearning algorithm, the predicted first-day move is 11%, while the predicted move on the seventh day is 12%.
What analysts are saying
Needham analyst Rajvindra Gill raised his price target on the stock from $75 to $85 and maintained a "Buy" rating on SMART Global shares following the previous quarter's earnings beat. In a research note, the analyst told investors that the company's gross margins were the highlight of Q4 2021 since they were materially higher than anticipated as SMART Global transforms its operations to become an AI system implementation leader. Gill added that the company is not a "Brazil memory story" anymore as the company's business presently accounts for around 25% of its sales.
Also, Deutsche Bank analyst Sidney Ho has raised the research firm's target price on SGH shares from $66 to $70 and maintained a "Buy" rating on the stock post Q4 earnings results release. Ho said that although revenue was in line with his expectations, the most impressive thing with the stock was the improvement of gross margin. In a research note, the analyst told investors that SMART Global expects improvement to continue with significant upside to a new target range. Most importantly, Ho is “encouraged with the transformation story” of SGH and sees much potential for the stock moving higher.
Jefferies analyst Mark Lipacis also raised his price target on the stock from $665 to $72 and maintained a "Buy" rating on the stock, dubbing it a "transformational play” following the EPS beat in the last two quarters. While Lipacis' view is that most investors see SMART Global as a Brazil memory firm, he expects 20% CAGR for the company's Intelligent Platform Solutions and sees the diversification from Brazil as encouraging considering other businesses are more profitable, and this shift will make the company less reliant in an emerging market.
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