While Super Micro Computer (NASDAQ: SMCI) has experienced a set of calamities in recent months as a business and on the stock market side, analysts have not turned as bearish on it as might appear sensible.
Specifically, SMCI shares retain a consensus ‘hold’ rating on the stock analysis platform TipRanks, with the average forecast predicting an 18.17% rally to $38.57 from the press time price of $32.15 in the coming 12 months.
The anticipated stands in stark contrast with the last 6 months which saw Supermicro stock decline 59.91% and diminish its 2024 gains to just 18.17% – in May, this figure stood at 316.15%.
Picks for you
The situation – best described as better than expected given Supermicro’s situation – can perhaps be attributed to a combination of factors, such as the explicitly stated confidence the firm will eventually rebound and a relative lack of new price target (PT) revisions.
Analysts update their SMCI stock price targets
For example, only five prominent institutions revised their SMCI ratings and forecasts through October and November: Barclays, Argus Research, Wedbush, JPMorgan (NYSE: JPM), and Goldman Sachs (NYSE: GS).
Furthermore, three out of the five entailed maintaining a ‘neutral’ rating, and only one of the two downgrades – that provided by JPMorgan – was down to ‘sell.’
Still, the new price targets demonstrate that Wall Street experts have considered Supermicro’s current situation and not only the hopes for its future, as four of the five downgraded the forecast, and Argus provided no PT at all.
In order from oldest to newest – the newest being dated November 6 – Barclays revised its prediction from $438 to $42, Wedbush from $62 to $32, JPMorgan from $50 to $23, and Goldman from $67.5 to $28.
Overwhelmingly, the analysts – including Wedbush’s Matt Bryson, JPMorgan’s Samik Chatterjee, and Goldman Sachs’ Michael Ng – cited Supermicro’s compliance issues, weak preliminary earnings, and weak and vague guidance as the main reasons behind their reassessments.
Why SMCI stock is in trouble
Indeed, the main reason why the deluge of ‘neutral’ ratings and price target downgrades can be seen as unexpectedly strong is the direness of the straits Super Micro Computer is in.
In August, Supermicro not only delayed its annual and quarterly reports with regulators, but was also a subject of a scathing report Hindenburg Research published when unveiling its short position.
This situation for the company and SMCI shares worsened in recent months as fears of delisting became commonplace and the firm’s long-standing auditor – Ernst & Young – resigned.
Supermicro stock’s most recent plunge – that came mere weeks after the arrival of a new auditor generated a sudden recovery – demonstrates the continued fragility of SMCI stock and the persistent uncertainty.
Featured image via Shutterstock
