Sanmina Stock Slides as Disappointing Q4 Revenue Forecast Overshadows Earnings Beat

Shares of Sanmina Corp. (SANM) fell sharply in pre-market trading after the company issued a fourth-quarter revenue forecast that disappointed investors, overshadowing a strong earnings beat for the fiscal third quarter.

Guidance Misses Expectations

Sanmina reported strong results for its fiscal third quarter, posting an adjusted earnings per share of $3.31, significantly beating the analyst consensus of $2.77. Revenue also topped estimates, coming in at $3.46 billion against an expected $3.40 billion, marking nearly 70% year-over-year growth.

The positive results were driven by the acquisition of ZT Systems and 17% growth in Sanmina's core operations. However, the company's forward-looking guidance for the fourth quarter weighed on sentiment. Sanmina projected Q4 revenue in the range of $3.30 billion to $3.60 billion, with a midpoint of $3.45 billion that is approximately 2% below the analyst consensus of $3.52 billion.

Management Commentary and Market Headwinds

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CFO Jon Faust attributed the softer outlook for the ZT Systems business to timing shifts in some legacy programs. Faust clarified that a key next-generation accelerated-compute program remains on track but its revenue will not be recognized in the fourth quarter, according to the source material.

Several other factors contributed to the negative market reaction:

• Margin Concerns: Questions were raised on the earnings call about the sustainability of the 8.0% operating margin achieved in Q3, which was aided by a favorable one-time product mix.
• Insider Selling: Insiders have sold approximately $37.9 million in company shares over the past three months, adding to cautious sentiment.
• Broader Market Weakness: The sell-off was amplified by broader pressure on the tech-heavy NASDAQ index, which was trading lower.