Sanmina-Sci Corp (SANM)

[PowerPole]

Sanmina Looks Cheap, Lacks Near-Term Catalysts...

http://www.forbes.com/2006/05/17/sanmina-sci-0517markets13.html?partner=yahootix

Bear Stearns maintained a "peer perform" rating on Sanmina-SCI after meeting with the company's chief executive officer.

"Although there was no new incremental information, the tone was relatively upbeat," wrote analyst Kevin Kessel in a report Wednesday.

"Sanmina remains focused on growth, particularly within its standard EMS and components businesses which it believes will help it improve its near-term operating margin performance."

As an example, Sanmina (nasdaq: SANM - news - people ) said it is intensely focused on improving its printed circuit board (PCB) operations, with a short-term goal to increase gross margins to 10%. Longer-term, the company believes its PCB operations can support gross margins north of 20%.

In addition, Sanmina believes it could see more OEM divestitures, especially in Europe. The company said it plans to ramp a new ODM Advanced Micro Devices (nyse: AMD - news - people ) server for a tier-1 OEM in the September timeframe.

Kessel made no change to his fiscal third-quarter estimates of 9 cents on $2.76 billion. He also maintained calendar 2006 and 2007 earnings-per-share estimates of 37 cents and 50 cents, respectively.

"We believe Sanmina shares remain inexpensive," said the analyst, "however, we remain on the sidelines until we sense the company has more near-term catalysts in sight."