Super Micro Computer (NASDAQ:SMCI) has been riding a news rollercoaster with a mix of ups and downs capturing attention.
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The latest curveball? Super Micro Computer is being shown the exit door from the tech-heavy Nasdaq-100, effective before the open on December 23, as part of the index’s quarterly reshuffle. For institutional investors tied to tracking the index, this move removes any obligation to hold onto the stock.
On a brighter note, Nasdaq accepted SMCI’s request to extend the deadline for filing its annual report. The embattled server company now has until the end of February to submit its audited financials, which it hopes will be sufficient to avoid delisting.
In another piece of good news, a special committee convened by SMCI to address concerns raised by the company’s previous auditor found “no evidence of misconduct on the part of management or the Board of Directors.” While reassuring, these findings still need validation from SMCI’s new auditor, BDO, and final approval from Nasdaq.
For investors, the question remains: Can SMCI meet the exchange’s requirements in time? Failure to do so could deal a severe blow to the stock.
One investor, known by the pseudonym Hataf Capital, believes that the potential rewards more than justify the risks.
“With the regulatory overhang largely resolved and strong fundamental growth intact, I believe SMCI offers an exceptional risk-reward opportunity at current levels,” the investor explains, noting that the special committee’s findings have addressed key concerns weighing on the stock.
Moreover, the investor notes, the company has plenty of business opportunities up ahead. Hataf places particular emphasis on Nvidia’s industry-leading Blackwell GPUs, which work in tandem with SMCI’s liquid-cooled servers.
“SMCI’s deep partnership with Nvidia places it at the epicenter of this generational hardware upgrade cycle,” the investor added.
SMCI’s valuation, according to Hataf, makes the opportunity even more compelling. Its Forward P/E multiple of 13.4 is significantly below the sector median of 26.2x, presenting an attractive entry point for long-term investors.
“SMCI’s current market price reflects lingering concerns about regulatory issues rather than the company’s fundamental value and growth potential,” the investor asserts.
To this end, Hataf Capital upgrades SMCI stock to a Strong Buy, describing it as a “compelling investment opportunity.” (To watch Hataf Capital’s track record, click here)
Meanwhile, Wall Street appears more cautious, opting to observe developments before taking a definitive stance. The stock has garnered a Hold (i.e., Neutral) consensus rating, based on 2 Buy, 5 Hold, and 2 Sell recommendations. Nevertheless, its 12-month average price target of $38.57 suggests a potential 22% upside. (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.
