BNC Research • Oct. 29, 2014
Sanmina: How Watching Guidance Lead To This Profitable Trade
- Tracking management guidance and conference calls can give you hints of what is to come.
- Sanmina's quarterly performance was improving and management was optimistic about 2014.
- Management's credible historical guidance convinced me that the market would like 2Q14 results.
- This is a simple yet powerful example of a plain analysis that can be applied to other similar opportunities.
Sanmina-SCI: A Speculative Stock for Option Writers
Oct. 28, 2014, 12:46 PM
Oct. 27, 2014, 5:14 PM
- Sanmina (NASDAQ:SANM) expects FQ1 revenue of $1.65B-$1.7B and EPS of $0.55-$0.60, above a consensus of $1.58B and $0.49.
- Gross margin rose 10 bps Y/Y in FQ4 to 7.8%. GAAP opex -1% to $70.1M.
- Rival Flextronics (NASDAQ:FLEX) is getting an AH lift from Sanmina's numbers. Its FQ2 report arrives on Wednesday.
- FQ4 results, PR
Oct. 27, 2014, 4:14 PM
Oct. 20, 2014, 1:31 PM
- With shares down 23% since Sep. 1 (vs. a 6% drop for the S&P), Goldman's Mark Delaney has upgraded Sanmina (SANM +3.7%) to Neutral, while keeping his $18 target intact.
- Though still seeing risk to calendar Q4 estimates, Delaney thinks the contract manufacturer now has a fair relative valuation, given shares trade at a 16% discount to peers on a forward P/E (2015E EPS) basis.
Oct. 10, 2014, 1:42 PM
- Following Microchip's warning and related prediction of a chip industry correction, Goldman's James Covello thinks there's 15%-20% downside in industry names.
- Covello, who lowered his industry view to Cautious in August: "The last time Microchip negatively preannounced was October 15, 2012 (3% sales miss). Between October 1 and December 31, Street 2013 sales estimates for the Semi group were revised down 6% on average."
- He adds several datapoints suggest the industry has been overheating. Among them: Semi revenue growth has outpaced end-market growth, and supply chain inventory dollars rose 3% more than their 3-year average in Q2.
- "Nobody will be spared," predicts Hedgeye's Craig Berger. Benchmark's Gary Mobley observes 5 of the 6 chip stocks to have made Q3 pre-announcements have thus done so to the downside.
- Worth noting: Mobile chipmaker Silicon Motion (SIMO -8.9%) is the one chipmaker to have positively pre-announced. It might not be a coincidence that Microchip has relatively low mobile exposure.
- Observing U.S. macro data remains positive even as China and Europe soften, Longbow's JoAnne Feeney remains bullish long-term on select names. However, she has cut her short-term rating on Linear (LLTC -3.8%) to Sell, and removed IDT (IDTI -7.1%) from her trading long list.
- In addition to the names previously mentioned, the following chip stocks are seeing steep losses: AMD -5.1%. FCS -13.6%. NXPI -11.2%. CODE -11%. LSCC -9.6%. SIMG -8.1%. IPHI -7.7%. ISIL -9.5%. CY -6.9%. RMBS -7.1%. QUIK -5.7%. SQNS -5.1%. IMOS -6.5%.
- Foundries and contract manufacturers are also selling off: TSM -3.9%. UMC -2%. SMI -2.4%. SANM -11.7%. FLEX -6.8%. JBL -4%.
- Chip ETFs: SOXX, SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Jul. 21, 2014, 5:38 PM
Apr. 23, 2014, 12:45 PM
Apr. 23, 2014, 9:17 AM
Apr. 22, 2014, 4:21 PM
Jan. 28, 2014, 9:10 AM
Jan. 27, 2014, 7:05 PM
- Silicon Motion (SIMO) expects Q1 revenue to be flat to down 10% Q/Q vs.a consensus for a 2% decline. However, the company also expects 2014 revenue to be up 5%-15% Y/Y vs. a consensus for 5% growth. Shares +4.8% AH. (Q4 results, PR)
- STMicroelectronics (STM) expects Q1 revenue to decline 9.5% Q/Q (+/- 3.5%); that's worse than a consensus for a 7% drop. Shares unchanged AH for now. (Q4 results, PR)
- Sanmina (SANM) expects FQ2 revenue of $1.425B-$1.475B and EPS of $0.36-$0.42 vs. a consensus of $1.45B and $0.37. Shares +7.1% AH. (FQ1 results, PR)
Jan. 27, 2014, 4:09 PM
Jan. 13, 2014, 9:56 AM
- H-P (HPQ +3.7%) and Teradata (TDC +1.8%) have been started at Overweight by Atlantic Securities.
- BlackBerry (BBRY -6.2%) has been cut to Underperform by Oppenheimer following a major rally over the last four weeks. RBC upgraded shares last Friday.
- F5 (FFIV +3.7%) has been upgraded to Outperform by William Blair.
- Qihoo (QIHU +4.3%) has been upgraded to Buy by Stifel, and started at Buy by UBS. Shares fell last Thursday following a report questioning the size of the company's search share gains, and rose the day before thanks to an Alibaba investment rumor.
- Cree (CREE -6.6%) has been cut to Hold by Stifel.
- Autodesk (ADSK +1.8%) has been upgraded to Overweight by Morgan Stanley.
- Skyworks (SWKS +4.7%) has been upgraded to Buy by B. Riley.
- Red Hat (RHT +4.4%) has been upgraded to Overweight by Morgan Stanley.
- Fortinet (FTNT +2.1%) has been upgraded to Overweight by Morgan Stanley.
- HomeAway (AWAY +2%) has been upgraded to Overweight by Barclays.
- Garmin (GRMN +1.1%) has been upgraded to Outperform by Oppenheimer.
- Nimble Storage (NMBL +2.2%) has been upgraded to Outperform by Pac Crest. The firm started Nimble and Sector Perform just six days ago.
- Peregrine Semi (PSMI -9.1%) has been cut to Hold by Deutsche.
- Sanmina (SANM -7%) has been cut to Underperform by Raymond James.
- Symantec (SYMC -2.3%) has been cut to Underweight by Morgan Stanley.
- NCR (NCR +2.2%) has been started at Overweight by JPMorgan, and added to the firm's Focus List.
- Vipshop (VIPS +1.8%) has been started at Buy by UBS.
- Parametric Sound (PAMT +4.5%) has been started at Strong Buy by Needham.
Nov. 1, 2013, 5:46 PM
Oct. 29, 2013, 12:45 PM
Oct. 29, 2013, 11:15 AM
- Seagate (STX -3%) has been upgraded to Hold by Craig-Hallum after missing FQ1 estimates and issuing light FQ2 revenue guidance.
- Red Hat (RHT +0.9%) has been upgraded to Buy by CLSA.
- Sanmina (SANM -15.4%) has been cut to Hold by Craig-Hallum and Needham after providing weak FQ1 guidance to go with its FQ4 EPS beat.
- Twitter (TWTR) has been started at Buy by Sterne Agee ahead of its IPO. The firm's PT is $32, well above an IPO price range of $17-$20.
SANM vs. ETF Alternatives
Sanmina Corp manufactures solutions, components, products and repair, logistics and after-market services. It provides these comprehensive offerings to original equipment manufacturers, or OEMs in communications networks, computing & storage.
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