Smart Global Tops 1Q Estimates; Street Is Bullish

Smart Global Holdings reported better-than-expected 1Q results on Tuesday. Meanwhile, the specialty memory, storage, and hybrid solutions provider’s 2Q outlook also came ahead of the Street consensus.

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Smart Global’s (SGH) adjusted earnings jumped 41.8% to $0.78 per share year-on-year and exceeded analysts’ expectations of $0.70. Moreover, its 1Q revenue increased by 7.2% to $291.7 million and surpassed the consensus estimate of $291.2 million.

Smart Global expects its 2Q revenues to be between $285 million and $305 million (mid-point $295 million). The mid-point of the guidance range is higher than the Street estimates of $288.6 million.

Meanwhile, its non-GAAP EPS forecast of $0.80 is also above analysts’ estimates of $0.71.(See SGH stock analysis on TipRanks)

Ahead of the earnings, Rosenblatt Securities analyst Kevin Cassidy raised the stock’s price target to $55 (39% upside potential) from $45 and reiterated a Buy rating.

In a note to investors, Cassidy said, “We are expecting SGH to deliver a solid 1QF21 earnings report with very good potential for beat to our estimates. The upside coming from improving end market demand and memory market fundamentals. We believe some of this good news is getting priced into the shares though we see further upside coming from the pending CREE LED products acquisition.”

Like Cassidy, the rest of the Street maintains a bullish outlook on the stock. The Strong Buy analyst consensus is based on 4 unanimous Buys. Meanwhile, the average analyst price target of $45.75 implies 15.7% upside potential at current levels. Shares have returned 4.8% over the past year.