- The stock price of SMART Global Holdings (SGH) increased by over 4% pre-market today. This is why.
The stock price of SMART Global Holdings (SGH) increased by over 4% pre-market today.
Why: Bullish research report
Price target: Increased from $28 to $32
Analyst: Deutsche Bank analyst Sidney Ho
Ho adjusted the rating while expecting the company to report Q4 results in line with expectations, but the Q1 guidance is learning to the conservative side.
“We trimmed our estimates for the organic businesses starting in F1Q due to a degrading macro environment, as well as sharp inventory adjustments in memory components seen across key OEMs. We also included the P&L impact from the acquisition of Stratus Technologies (closed in late August) showing EPS accretion from the deal,” wrote Ho in a research note. “The net impact is that our F1Q EPS estimate of $0.73 is unchanged, but our CY23E is lowered from $3.20 to $3.00. We also lowered our price target from $32 to $28. While we acknowledge that macro uncertainties have increased, we believe SGH’s revenue cuts will not be nearly as much as what other memory/storage companies are experiencing, as SGH now has a much more diversified portfolio, with its Intelligent Platform Solutions (IPS) business (about 35% of total revenue in F1Q) likely to grow even as the macro weakens further. With the stock down about 50% YTD (similar to other memory/storage stocks) and now trading at only about 5.5x CY23E EPS.”