Rewind back to mid-July and Super Micro Computer (NASDAQ:SMCI) was still one of the hottest stocks out there. But after riding the wave of AI euphoria, the story has soured badly.
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First, a report by short seller Hindenburg Research cast a shadow over the company’s prospects, raising serious accusations of “accounting manipulation, sibling self-dealing, and sanction evasion.” To make matters worse, SMCI then announced a delay in filing its annual 10-K report, which only fueled investor concerns. That was enough to get investors jittery, who sent shares down in a huff.
And maybe that should have been expected, especially considering SMCI’s history. Back in 2018, the company faced a similar situation when a delayed filing of its F2017 10-K report led to a temporary NASDAQ delisting.
So, what’s next? Well, according to Northland’s Nehal Chokshi, an analyst ranked in the top 1% of Street stock experts, now could be the perfect buying opportunity. Chokshi believes this recent dip offers a “very attractive entry point.”
Chokshi brushes away all the recent bearish arguments one by one. As for the 10-K delay, Chokshi is confident it will “prove innocuous.” The analyst points out that “three sources indicate that the delay is to test the efficacy of incremental internal controls across multiple business functions.” The company has put these in place to “raise the bar of effective internal controls” while it keeps growing at a fast clip (revenue more than doubled in FY24 and is expected to nearly double again in FY25, while G&A expenses increased by 50% year-over-year and 20% quarter-over-quarter).
Meanwhile, regarding the short report, Chokshi’s “review of the verifiable sources of Hindenburg report show negatively spun neutral data points.”
On top of that, Chokshi’s proprietary channel checks indicate that SMCI is delivering “significant value to customers,” further cementing his confidence in the stock, which he continues to regard as a ‘top pick.’
To this end, Chokshi rates SMCI shares an Outperform (i.e., Buy), along with a price target of $1,300. The figure suggests the stock will surge 207% over the next 12 months. (To watch Chokshi’s track record, click here)
Overall, the broader Wall Street outlook remains optimistic; Analysts have set an average price target of $978.50, indicating a 131% upside, with a Moderate Buy consensus based on 5 Buys, 5 Holds, and a single Sell. (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.
