SMART Global Shares Down 7% on Q1 Guidance Miss

SMART Global Holdings, Inc. (NASDAQ:SGH) shares were trading more than 7% lower Wednesday afternoon following the company’s reported Q4 results and worse-than-expected guidance. EPS came in at $0.80, better than the Street estimate of $0.65. Revenue was $438 million, compared to the Street estimate of $440 million.

The EPS upside was driven by a lower tax rate and lower OPEX, but Q1 guidance came in below expectation as strength in Intelligent Platform Solutions (IPS) was more than offset by weakness in LED (down 20% quarter-over-quarter) and Memory (down 5% quarter-over-quarter).

For Q1/23, the company expects EPS to be in the range of $0.45-$0.75, compared to the Street estimate of $0.76, and revenue in the range of $425-475 million, compared to the Street estimate of $455.9 million.

According to the analysts at Deutsche Bank, management appears to have good visibility into Q1 for the IPS business and is building inventory to support Q2 sales. In addition, the Stratus acquisition is on track to deliver revenue of $35-40 million and a gross margin of 45-50% in Q1. The analysts lowered their price target to $24 from $28, while reiterating their buy rating.