Smart Global Shares Gain 6% on Solid Q4 Results

Shares of Smart Global Holdings (SGH) gained 6.6% in extended trade on Tuesday and 7.5% at the time of writing after the company reported better-than-expected quarterly earnings and revenue for the fiscal fourth quarter of 2021 (ended August 27, 2021).

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The company engages in the design, manufacture and sale of specialty memory solutions and services to the electronics industry. (See Smart Global stock charts on TipRanks)

Smart Global’s adjusted earnings of $2.16 per share came much ahead of the Street’s expectations of $1.60 per share. The figure also compares favorably with $0.82 per share reported in the year-ago quarter.

Revenue jumped 57% year-over-year to $467.7 million. Also, it surpassed the analyst’s expectations of $461.3 billion.

Research and development expenses rose 2.1% to $16.7 million from the year-ago quarter. Selling, general and administrative costs rose 85.9% to $51.3 million.

For Fiscal Year 2021, the company reported 34% growth in revenues. Also, Smart Global delivered adjusted earnings of $5.22 per share, compared to $2.59 per share in Fiscal Year 2020.

The CEO of Smart Global, Mark Adams, “Fiscal 2021 has been a transformative year for SGH. We are proud of the team’s many accomplishments across each of our lines of business, Intelligent Platform Solutions, Memory Solutions, and LED solutions. As we enter fiscal 2022, we believe we have the right platform to continue to execute our growth and diversification strategy while increasing value for our stakeholders.”

For the first quarter of Fiscal Year 2022, the company expects revenue between $440 million and $480 million. Adjusted earnings are anticipated in the range of $1.80 to 2.20 per share.

Following the release, Rosenblatt Securities analyst Kevin Cassidy maintained a Buy rating on Smart Global and a price target of $75 (71.2% upside potential).

Cassidy said, “We are recommending SGH shares for investors looking for a name with high exposure to the artificial intelligence market that has been undiscovered.”

Further, looking into the LED components segment, the analyst noted, “Looking out to 1QF22, we are modeling a seasonal revenue decline to $100M. We expect gross margin can remain in the 30% range.”

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Overall, the Street has a Strong Buy consensus rating based on 3 Buys. The average Smart Global price target of $76.7 implies 75% upside potential from current levels.

TipRanks’ Stock Investors tool shows that investors currently have a Very Negative stance on Smart Global, with 12.5% of investors on TipRanks decreasing their exposure to SGH stock over the past 30 days.