There are business updates and then there are business updates, ones which have huge repercussions riding on them. It is safe to say that today’s upcoming conference call after the markets close from Super Micro Computer (NASDAQ:SMCI)–when the company will share “a second quarter fiscal 2025 business update”–is shaping up to be one of those big ones.
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While the numbers are important, the market is also eager to get sense for whether SMCI is indeed on track to submit its audited financials by the NASDAQ-mandated deadline of February 25th. After missing an earlier 10-K SEC filing, SMCI runs the risk of being delisted from the stock exchange if it fails to meet this deadline.
Investor sentiment seems to be gaining steam, and SMCI shares have jumped up by 33% over the past few days in anticipation of positive vibes from the upcoming call.
One investor who is known by the pseudonym Oakoff Investment thinks this could be just the beginning of a major rebound for SMCI.
“The stock price is likely to skyrocket as the market reprices the underlying risks that shape SMCI’s valuation discount,” notes the investor. “I think the risk-to-reward is on the buyers’ side.”
Oakoff notes that SMCI is right in the middle of the white-hot data center solutions market, which by some estimates is expected to grow at a compound annual growth rate of 11.8% between 2023 and 2028. Oakoff believes the company is particularly well-positioned to enjoy the spoils of this expanding market, which could be worth almost $600 billion market over the coming years.
“I think SMCI should have an edge over other peers thanks to years of heavy R&D expenses and close partnerships with the leading GPU makers like Nvidia,” explains the investor.
In addition, Oakoff points to SMCI’s efforts to improve manufacturing processes, including via a new production facility in Malaysia. The investor adds that the greater scale should translate into improved margins going forward, which should provide additional support for share prices.
Of course, all this is dependent on confirmation that the company is on track to meet its filing deadlines, says the investor. Oakoff is expecting this much-sought after clarity to be broadcast on the call today, which will serve as that “final bullish confirmation” that the market has been waiting for.
“I think SMCI has a real chance to make a comeback,” concludes Oakoff, who is rating SMCI a Buy. (To watch Oakoff Investment’s track record, click here)
Wall Street, on the other hand, is not quite ready to jump onboard. With 2 Buy, 3 Hold, and 1 Sell rating, SMCI holds a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $29.75 contains a downside of ~30%. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
