Wedbush Reports SMART Modular Tech Results Beat Expectations

According to Wedbush, SMART Modular Technologies SMOD results beat expectations. Wedbush reported that, although DRAM pricing, capacity constraints at Brazil, and muted demand from a leading networking OEM were headwinds in the quarter, SMART Modular (SMOD) reported FQ2 (Feb) above the Street and our estimates yesterday AMC. “We think management's largely in-line FQ3 (May) guidance on flat Q/Q DRAM pricing is likely conservative given that DRAM ASPs in the quarter have already modestly increased. We were also very encouraged by continued SSD design win traction at a Tier I OEM beyond IBM and management's expectations for meaningful revenue contributions from solid state storage in the 2H of CY:11. We believe SMART's story remains firmly intact and view any weakness in the stock today as a buying opportunity. Reiterate OUTPERFORM and increasing PT to $11 from $10.50. Our new 12-month PT of $11 (from $10.50) is based upon about 10x our CY:12 pro forma EPS estimate of $0.90 plus $2.03 (up from $1.41) in cash.” SMART Modular Technologies closed yesterday at $7.14.