Smart Global Holdings Inc Receives a Buy from Needham

Needham analyst Rajvindra Gill maintained a Buy rating on Smart Global Holdings Inc (NASDAQ: SGH) today and set a price target of $75. The company’s shares closed yesterday at $43.31.

Gill noted:

“Last night after the close, Smart Global announced the acquisition of privately-held $85MM, which includes $25MM of performance based targets. The valuation was 10.5x FY’17 EBITDA and 0.5x FY’17 sales. Penguin is a system integrator targeting primarily GPU-based platforms, artificial intelligence, HPC and machine learning applications. Major end markets include social media, oil & gas, and financial services – markets where SGH does not currently participate. We applaud the acquisition as it diversifies the business away from Brazil (new segment + specialty memory = ~50% of sales) but more importantly uniquely positions the company to be the primary system and memory integrator for emerging markets, such as AI and ML. While EBITDA margins are low (5%) through topline growth, EBITDA margins should expand.”

According to TipRanks.com, Gill is a top 25 analyst with an average return of 22.6% and a 70.8% success rate. Gill covers the Consumer Goods sector, focusing on stocks such as Everspin Technologies Inc, Adesto Technologies Corp, and Silicon Laboratories.

Smart Global Holdings Inc has an analyst consensus of Strong Buy, with a price target consensus of $59.83.

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Smart Global Holdings Inc’s market cap is currently $957.4M and has a P/E ratio of 16.96. The company has a Price to Book ratio of 6.52.

Based on the recent corporate insider activity of 39 insiders, corporate insider sentiment is negative on the stock.

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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.