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Investing.com - Needham lowered its price target on Super Micro Computer (NASDAQ:SMCI) to $51.00 from $60.00 on Wednesday, while maintaining a Buy rating on the stock. SMCI currently trades at $47.40, having declined 10.04% over the past week according to InvestingPro data.
The price target reduction follows Super Micro Computer’s fiscal first quarter 2026 revenue announcement, which aligned with its preliminary update, but included a mixed outlook for the second quarter.
Super Micro Computer received its largest design award in company history, which is driving better-than-expected revenue projections for both fiscal second quarter and full-year 2026, according to Needham. InvestingPro data shows SMCI has maintained impressive revenue growth with a five-year CAGR of 46%, and analysts anticipate this momentum to continue with 47% revenue growth forecast for fiscal 2026.
Despite the revenue boost, the firm cited concerns about compressed gross margins due to higher costs associated with the initial ramp of the new program, along with lower margins that this design award carries. This aligns with InvestingPro data showing SMCI’s current gross profit margin at just 11.06%, confirming the company’s margin challenges.
Needham has revised its fiscal year 2026 projections for Super Micro Computer to $36.5 billion in revenue with a 7.1% gross margin, compared to previous estimates of $32 billion in revenue with a 9.9% gross margin. According to InvestingPro, analyst targets for SMCI range from $34 to $93, and the stock is currently trading near its Fair Value. InvestingPro offers 14 additional investment tips and comprehensive financial health analysis for SMCI in its Pro Research Report, available to subscribers.
In other recent news, Super Micro Computer reported its first-quarter fiscal 2026 earnings, which showed a notable shortfall in both earnings per share (EPS) and revenue. The company’s EPS was reported at $0.35, missing the analyst expectation of $0.46. Revenue for the quarter reached $5 billion, falling short of the anticipated $6.46 billion. Despite this, Super Micro raised its full-year 2026 revenue outlook, although its second-quarter EPS guidance was weaker than expected. Following these results, Raymond James adjusted its price target for Super Micro Computer to $50, down from $53, maintaining an Outperform rating. Similarly, Mizuho lowered its price target to $45 from $50, maintaining a Neutral rating, after Super Micro’s September quarter revenue aligned with its pre-announcement but missed the consensus estimate. BofA Securities also revised its price target to $34 from $37, retaining an Underperform rating due to concerns over declining gross margins. These recent developments highlight the challenges Super Micro Computer is facing in meeting market expectations.
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