Super microcomputer (NASDAQ: SMCI) The stock is losing ground in Tuesday’s trading. The company’s stock price was down 5.9% as of 3:15 PM ET, having fallen as much as 9.9% earlier in the trading day.
Supermicro is hot on the heels of recent news about the stock JP Morgan. Although JP Morgan analysts said orders for Supermicro’s servers remained robust despite recent controversies surrounding the company, the company maintained an underweight rating on the stock and a one-year price target of $23 per share.
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JP Morgan analysts recently met with Supermicro management and came away with some encouraging conclusions. The analysts believe that Supermicro has not seen a significant loss of orders to competitors, despite some reports suggesting that it has. The company said it planned to launch new products in 2025 and that production at its Malaysia factory was on track to start scaling up in the first half of next year.
Supermicro said it has sufficient working capital to provide the production needed to generate quarterly sales of between $5.5 billion and $6 billion. Nvidia‘s next generation Blackwell processors for artificial intelligence (AI). But despite some promising indicators and catalysts ahead, JP Morgan’s one-year price target of $23 per share implies a downside of about 45% from the stock’s current levels.
JP Morgan’s bearish outlook for Supermicro stock highlights the recent challenges facing the company. Although the company’s near-term performance prospects appear solid, recent controversies have caused the server specialist’s share price to become highly volatile. Some investors are concerned that the unfolding developments could trigger another wave of major sell-offs.
After Ernst & Young resigned as Supermicro’s financial auditor in October, the technology company brought in BDO as a replacement. Having an auditor on board means the company has been able to make progress on filing its delayed 10-K report for the past fiscal year. As a result, the company was able to submit a filing plan Nasdaq as a result, the share was not delisted from the stock exchange.
Nasdaq accepted the plan last week, and attention now turns to what emerges in Supermicro’s 10-K filing and subsequent fiscal reports. The company expects all required reports to be submitted by February 25.
If Supermicro has to significantly revise its past performance, the company’s stock price could plummet. The company is also reportedly under investigation by the Department of Justice. So while the technology specialist’s core business appears to be seeing encouraging demand, the shares are not out of the woods yet.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Keith Noonan has no positions in the stocks mentioned. The Motley Fool has and recommends positions in JPMorgan Chase and Nvidia. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
Why Super Micro Computer Stock Is Sinking Today was originally published by The Motley Fool
