Super Micro Computer (NASDAQ:SMCI) investors have a big day ahead as the AI server specialist prepares to unveil its fiscal second-quarter results (December quarter) after the market closes.
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Results aside, investors will be hoping to get confirmation the company is ready to finally submit its FY2024 annual and quarterly financial reports and also put a new CFO in place. Recall, SMCI faces a deadline of February 25 for the filings or risk being delisted from the Nasdaq. The company recently brought on BDO as its new auditor and indicated that revising past financial statements may not be required.
The chances of all that happening, however, are not particularly high, says J.P. Morgan’s Samik Chatterjee, an analyst ranked amongst the top 3% of Wall Street stock pros.
“We expect the company to update investors that it is working towards regaining compliance with SEC by the upcoming deadline, although the two important announcements in relation to: 1) confirmation of filing 10-K and 10-Q, as well as 2) appointing a new CFO, might be beyond the February 11th earnings release in terms of our expectations for timeline of announcements,” the 5-star analyst opined.
So, not exactly what investors are hoping to hear ahead of the print. As far as the actual results, well, don’t expect any fireworks, either, appears to be Chatterjee’s advice.
The analyst thinks FQ2 revenue will match the company’s guide ($5.8 billion, up 57% year-over-year) rather than beat expectations as the company has done in the past. Looking ahead to FQ3 (March quarter), Chatterjee anticipates revenue to remain roughly the same sequentially ($5.8 billion vs. consensus at $6 billion). Even though Super Micro remains among the first to deliver HGX systems to customers, the financial guide will likely be “constrained” due to uncertainty in supply visibility for Blackwell shipments. That said, clearer trends should emerge by the June quarter, with some revenue growth on tap.
Beyond revenue drivers, investors will also be paying close attention to gross margins, with the line of thought being a slight decline between the first and second fiscal quarter is anticipated due to competitive pricing pressures both on Hopper and Blackwell products.
Looking at the bigger picture, Chatterjee thinks the company maintains a “strong position” in the AI server market, leveraging next-generation GPUs and advanced technical capabilities, such as liquid cooling. However, the SEC compliance issues create pressures on working capital, which the company must navigate while also “looking to preserve their market leadership.”
Accordingly, ahead of the print, Chatterjee rates SMCI shares as Underweight (i.e., Sell), while his $23 price target suggests shares are in for a big one-year slide of 42%. (To watch Chatterjee’s track record, click here)
The Street’s average price target is not much more promising; at $29.75, the figure implies a drop of 25% is in the cards over the next 12 months. All told, based on 3 Holds, 2 Buys and 1 Sell, the analyst consensus rates the stock a Hold (i.e., Neutral). (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.
