Super Micro Struggles With Compliance, Growth Uncertainty: JP Morgan Downgrades Shares

Super Micro Computer Inc (NASDAQ:SMCI) stock price fell after JP Morgan analyst Samik Chatterjee downgraded from Overweight to Neutral and lowered his price target from $950 to $500.

While the latest filings indicate that the company is working diligently to comply with regulatory requirements and that business is continuing as usual, Chatterjee noted that it is difficult to get more visibility when the company comes back into compliance with its filing requirements.

The analyst noted the Hindenburg report and the delay in the 10-K filing as separate events in their own right, but expects the lack of visibility on when the company will return to compliance to create challenges for near-term sentiment on results compared to the 2017- Period of time 2020 and the severity of the impact on the financial situation.

Therefore, he recommended that new investors stay on the sidelines. Additionally, the analyst noted that Super Micro’s follow-up response to ensure an unchanged demand pipeline could involve more pricing aggression, and timing expectations around margins recovering to the longer-term range would be a point of watch. for investors during the next two quarters.

The price target cut reflects lower earnings, in line with traditional IT hardware companies, which have much lower growth trajectories to account for the uncertainty.

The price target reflects Chatterjee’s updated calendar 2026 EPS estimate to a target P/E multiple of 10x (up from 19x previously) as exposure to strong AI-driven compute demand is offset by excess from evaluating internal controls and delay in regulatory submissions.

The analyst noted that Super Micro is positioned with a strong product portfolio that includes complete rack-scale solutions and liquid-cooled systems, as well as a unique lock-in approach to product development that enables rapid product refreshes in the context of the outlook strong demand for AI-driven computing. .

Chatterjee forecasts Q1 2025 revenue of $6.54 billion and EPS of $7.48.

Price action: Shares of SMCI were down 7.11% at $384.58 at last check on Friday.

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