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Needham Thinks Smart Global Holdings Inc’s Stock is Going to Recover


In a report released today, Rajvindra Gill from Needham maintained a Buy rating on Smart Global Holdings Inc (NASDAQ: SGH), with a price target of $75. The company’s shares closed yesterday at $30.25, close to its 52-week low of $26.26.

Gill observed:

“This week, we hosted a series of investor meetings in New York with CEO Ajay Shah and CFO Jack Pacheco. Ultimately, we like stories where there’s a material disconnect between the fundamentals and investor perception. Smart Global fits the bill perfectly. We believe the stock’s P/E multiple of 4.5x, EV/ sales multiple of 0.6x, and EV/EBITDA multiple of 3.9x, all based on our FY19E estimates, significantly undervalue the potential earnings power of the company and its competitive positioning. We think comparisons to pure-play memory suppliers, such as Micron or Samsung, are misguided. First and foremost, SGH is a system and memory integrator, targeting specific applications, that operates with a low CapEx model and no wafer fabs (CapEx is 3% of sales vs MU’s 30%).”

According to TipRanks.com, Gill is a 5-star analyst with an average return of 15.3% and a 56.1% success rate. Gill covers the Consumer Goods sector, focusing on stocks such as Everspin Technologies Inc, Adesto Technologies Corp, and Silicon Laboratories.

The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Smart Global Holdings Inc with a $67.50 average price target, a 123.1% upside from current levels. In a report issued on October 5, Roth Capital also reiterated a Buy rating on the stock with a $60 price target.

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Based on Smart Global Holdings Inc’s latest earnings release for the quarter ending August 31, the company reported a quarterly net profit of $29.72 million. In comparison, last year the company had a GAAP net loss of $10.21 million.

Based on the recent corporate insider activity of 59 insiders, corporate insider sentiment is negative on the stock.

TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.

SMART Global Holdings, Inc. is a designer, manufacturer and supplier of electronic subsystems to OEMs. It is engaged in the computer, industrial, networking, telecommunications, aerospace and defense markets. It has a product line that includes DRAM and Flash memory technologies. The company is founded in 1988 and is headquartered in Newark, CA.