We lift our 12-month target by $6 to $36 on a forward P/E of 11.3x our FY 21 (Sep.) EPS estimate, aligned with relative peers. We raise our FY 20 EPS estimate to $2.74 from $1.90 and FY 21's EPS to $3.19 from $2.81. SANM prints Jun-Q non-GAAP EPS of $0.86 vs. $0.82, surpassing consensus by $0.52, as opex controls (down $4M sequentially) drove upside in operating margin (4.6% vs. 2.7%). Revenues declined 18.4% to $1.66B, but topped consensus by $83M on stronger-than-expected demand in optical networking and wireless end markets. SANM's solid quarterly results and above-consensus outlook underscore the company's ability to quickly address supply chain constraints and maximize order fulfillment. With manufacturing inefficiencies now largely removed, we think SANM's current operating margin profile (4.5%+) is sustainable, leaving headroom for FY 21 estimates to move higher, in our view. Encouragingly, SANM posted a pretax return on invested capital (ROIC) of 24.3%, up from 14.6% the quarter prior.
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