Smart Global Holdings saw its shares jump on Wednesday after the computer systems firm beat Wall Street's targets for its fiscal second quarter and guided higher for the current period. SGH stock rose nearly 5% on the news.
The Milpitas, Calif.-based company late Tuesday said it earned an adjusted 87 cents a share on sales of $449 million in the quarter ended Feb. 25. Analysts had expected SGH earnings of 72 cents a share on sales of $435 million, according to FactSet. On a year-over-year basis, SGH earnings jumped 98% as sales climbed 48%.
"The results reflect our commitment to operational excellence by focusing on specialty solutions targeting growth markets such as AI, machine learning, data analytics, enterprise storage and edge/IoT (Internet of Things)," Chief Executive Mark Adams said in a news release.
For the current quarter, SGH forecast adjusted earnings of 75 cents a share on sales of $455 million. That's based on the midpoint of its outlook. Analysts had been modeling SGH earnings of 71 cents on sales of $452 million in the fiscal third quarter, FactSet said. In the year-earlier period, SGH earned 70 cents a share on sales of $438 million.
SGH Stock Rises After Q2 Report
On the stock market today, SGH stock rose 4.6% to close at 24.24. During the regular session Tuesday, SGH stock fell 5.3% to 23.17.
SGH stock hit a record high of 37.25 on Jan. 3 before the stock market correction.
Smart Global has three units: memory solutions, intelligent platform solutions, and LED solutions. LED is short for light-emitting diode. The memory unit accounted for 58% of sales in the second quarter. The LED lighting group made up 24% of sales. Intelligent platform solutions contributed the remaining 18%.
Rosenblatt Securities analyst Kevin Cassidy reiterated his buy rating on SGH stock and raised his 12-month price target to 60 from 50.
"The company is transforming into a core-to-edge AI technology leader," Cassidy said in a note to clients. "While supply constraints pushed some system deployments out, management pointed to an increasing opportunity funnel for its Intelligent Platform Solutions business."
SGH stock has an IBD Composite Rating of 68 out of 99, according to IBD Stock Checkup. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
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