SMART Modular (NASDAQ:SMOD) PT, EPS Slashed by Needham

It's hard to figure out why Needham maintained their current rating on SMART Modular Technologies (NASDAQ:SMOD), as their latest quarter was a disappointment, and there aren't any real catalysts to suggest a turnaround anytime soon.

Needham said, "While F1Q was disappointing, the DRAM pricing headwind was to some degree expected. We believe F2Q should represent the trough for SMOD, with F3Q stable and a robust snapback in F4Q. With tangible book value of $4.74 and estimates now reflecting the new environment, we see significant leverage in the model driving upside later in the year. Consequently, we maintain our rating and 10x multiple, but lower our target on the reduced outlook.

"We adjust estimates accordingly with F2Q being lowered to $173M and $0.10, vs. our initial estimates of $211M and $0.23. FY2011 is lowered to $756M and $0.65 vs. $895M and $0.97, and FY2012 is lowered to $798M and $0.69 vs. $969M and $1.00."

Needham & Company maintains a "Buy" on SMART Modular Technologies, which closed Friday at $5.58, down $0.79, or 12.40 percent. Needham slashed their price target on them from $11 to $6.50.