Analyst Ruplu Bhattacharya from Bank of America Securities reiterated a Sell rating on Super Micro Computer and increased the price target to $37.00 from $35.00.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Ruplu Bhattacharya’s rating is based on several factors impacting Super Micro Computer’s financial performance. The company has been experiencing margin pressures, particularly in the AI server market, which is becoming increasingly competitive. Recent financial results showed revenues and earnings per share falling short of expectations, with gross margins also not meeting guidance. Additionally, the company’s guidance for the upcoming quarter suggests continued challenges, with flat gross margins despite anticipated revenue growth.
Another concern is the impact of inventory reserves for older generation products, as some customers are delaying purchases in anticipation of new GPU launches from NVIDIA and AMD. This situation could lead to further issues in managing working capital and avoiding overproduction of outdated products. Furthermore, specification changes by a major customer have delayed revenue recognition, and constraints on capital have limited the company’s ability to scale production. These factors contribute to a challenging outlook for free cash flow, prompting Bhattacharya to maintain a Sell rating with a price objective of $37.
Bhattacharya covers the Technology sector, focusing on stocks such as Flex, Sanmina-Sci, and Concentrix. According to TipRanks, Bhattacharya has an average return of 4.5% and a 55.37% success rate on recommended stocks.