Super Micro Computer (NASDAQ:SMCI) stock has proven to be a wild ride for investors over the past year. From being one of the hottest names on the market, shares of the AI server maker came under huge pressure following the resignation of auditor Ernst & Young due to the company’s inability to file its 10-K report on time. The situation escalated with the looming threat of delisting from NASDAQ.
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But the comeback now is proving pretty resounding. Since bottoming out in mid-November, the shares have added 132% with Monday’s 28% gains offering another leg up.
The latest rally was driven by an important update from the company. Super Micro announced that the Independent Special Committee, which was established to look into concerns related to governance and financial reporting, has completed its review. The Committee concluded that there was no evidence of misconduct or fraud by management or the Board, despite identifying some minor lapses. However, the Committee recommended several changes, including appointing a new CFO to replace David Weigand, who has served as CFO since February 2021. Additionally, the Committee advised hiring a Chief Accounting and Compliance Officer and a General Counsel, recommendations that the Board has agreed to implement.
So, what next? J.P. Morgan’s Samik Chatterjee, an analyst ranked in the top 4% of Street stock experts, thinks there are several issues for investors to keep an eye on. These include: “1) whether the new independent auditors, BDO, accept the findings of the Special Committee or decide to undertake their own independent review; and 2) whether Nasdaq supports Super Micro’s request for an extension of time to regain compliance with the Nasdaq continued listing requirements, where the company has already outlined its intention to complete its 10-K and 10-Q filings and become current within the discretionary period available.”
The announcement, however, has not yet resulted in a change of stance from the 5-star analyst. Until “visibility into compliance increases,” Chatterjee keeps an Underweight (i.e., Sell) rating on SMCI shares. Meanwhile, his $23 price target suggests the stock could tumble ~45% in the months ahead. (To watch Chatterjee’s track record, click here)
Amongst Chatterjee’s colleagues, 1 other analyst joins him in the bear camp and with an additional 2 Buy recommendations and 5 Holds, the consensus leans toward a Hold (i.e. Neutral). The average target stands at $38.57, a figure that sits ~8% below the current share price. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
