Super Micro Earnings Will Test the Highflying Stock. The Focus Is On AI
$SUPER MICRO COMPUTER INC(SMCI)$ remains the year's best-performing technology stock, with a gain of 200% -- and the stock has rallied 700% over the past 12 months.
That huge gain reflects Super Micro's position as one of a handful of companies providing customers with AI servers based on $NVIDIA Corp(NVDA)$
The stock has been fluttering over the past week or two over concerns about the quarter. In seven of the past eight quarters, Super Micro issued positive earnings pre-announcements. But for whatever reason -- the company has declined to comment -- Super Micro decided not to pre-announce fiscal third-quarter results. That has investors worried.
On the other hand, last week's earnings reports from $Microsoft(MSFT)$
For the quarter ended March, Super Micro projected revenue of between $3.7 billion and $4.1 billion, with adjusted EPS of $5.20 to $6.01. Street consensus as tracked by FactSet calls for revenue of $3.99 billion, up 211%, with adjusted profit of $5.80 a share.
For the June quarter, Street consensus projects revenue of $4.9 billion, up 124% from a year ago, and adjusted profit of $7.18 a share.
Super Micro's June 2024 fiscal year guidance calls for revenue of $14.3 billion to $14.7 billion; Street consensus puts revenue at $14.6 billion, up 106%, with profit of $21.95 a share. The Street's fiscal 2025 forecast is for revenue of $21.1 billion, up 44%, with profit of $31 a share.
Loop Capital analyst Ananda Baruah recently repeated his Buy rating on Super Micro shares and lifted his target price to $1,500 from $600. Shares closed Monday at $890.35.
Baruah says the long-term outlook for the company remains unappreciated by investors and forecasts FY 2025 revenue of $24 billion, well ahead of the Street. Baruah says the company will report robust March quarter results and provide strong June quarter guidance.
Wedbush analyst Matt Bryson is more cautious, keeping his Neutral rating and $530 target price ahead of the quarter. He notes that the lack of a pre-announcement appears to take the possibility of a substantial upside to guidance off the table. He thinks the most likely outcome is "a modest beat," with guidance in line or above consensus.
Bryson adds that he still has "longer-term questions around growth and margins," and suggests that Nvidia offers a better play on a strong quarter for Super Micro, as the company's key component supplier.
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