As Super Micro Computer Inc. shares have rocketed 300% higher so far this year, Wall Street’s bullish price targets haven’t kept up.
Just two of the price targets listed on FactSet are above $1,000, as Super Micro shares
SMCI-1.73% traded near $1,170 Wednesday morning. That’s even as 11 of the 15 analysts covering the stock have bullish ratings.
While the price target for BofA Securities analyst Ruplu Bhattacharya isn’t listed on FactSet, it’s also higher than current trading levels, but not by much. He maintained his buy rating and lifted his price objective to $1,280 from $1,040 in a Wednesday note to clients. That new target implies less than 10% upside from current levels, factoring in Super Micro’s roughly 1% stock gain in Wednesday morning action. The new price objective was 10.1% above Tuesday’s close.
Bhattacharya was upbeat in discussing the opportunity for Super Micro, writing that the company is “well positioned to benefit from a growing AI server market” Industry revenues could climb to $200 billion from 2027 from roughly $39 billion currently, he said.
Plus, Super Micro boasts competitive advantages, including its “building-block architecture” that makes it easy for customers to adapt to new needs. The company also offers liquid-cooling technology that’s proving especially useful now, given the intensive power required for artificial-intelligence use cases.Bhattacharya also flagged Super Micro’s recent convertible-debt offering, which will give the company more cash for expansion and working-capital purposes. The convertible notes aren’t interest-bearing, meaning that Super Micro “was able to raise cash for working capital and business expansion, without increasing its annual interest expense related to the offering,” he noted.
“We expect SMCI to continue to see strong revenue growth given server demand from applications including artificial intelligence (AI), high-performance computing (HPC), bi-data analytics, engineering/technical workloads, streaming and content delivery, and compute-intensive graphics and online gaming,” Bhattacharya said.
He left intact estimates that he said are already “meaningfully above” the consensus view. For example, he expects Super Micro to deliver $25.5 billion in revenue and $35.66 in earnings per share for fiscal 2025, while analysts tracked by FactSet are anticipating $20.1 billion and $29.58, respectively.
Comments