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Investing.com - Raymond James has lowered its price target on Super Micro Computer (NASDAQ:SMCI) to $50.00 from $53.00 while maintaining an Outperform rating on the stock. Currently trading at $47.40, SMCI is slightly below InvestingPro’s calculated Fair Value, despite the stock taking a significant hit of over 10% in the past week.
The price target reduction follows Super Micro Computer’s fiscal first quarter 2026 earnings miss and a weak second-quarter EPS guidance that fell significantly below consensus expectations, despite the company raising its full-year 2026 revenue outlook. InvestingPro data shows 7 analysts have recently revised their earnings estimates downward, though the company is still expected to remain profitable this year.
Super Micro Computer had previously issued a negative pre-announcement on October 23, indicating sales of approximately $5 billion compared to its prior forecast of $6-7 billion, which resulted in shares trading down about 10% in after-hours trading. Despite this setback, the company maintains impressive revenue growth of 46.59% over the last twelve months.
Raymond James noted that margin weakness remains the primary concern for investors, with the weak second-quarter margin guidance reflecting "unique foundational expenses related to capacity expansion" as the company prepares for anticipated revenue growth. This aligns with InvestingPro data showing SMCI’s gross profit margin at just 11.06%, a potential weakness for this otherwise financially strong technology hardware player.
While Super Micro Computer’s management expressed confidence that these investments will eventually lead to margin expansion through higher volumes and manufacturing efficiencies, Raymond James acknowledged that "the timeline for improvement remains vague" and investors "likely remain weary" about the company’s intermediate-term margin challenges. Despite these concerns, SMCI maintains a strong financial position with a current ratio of 5.25 and operates with a moderate level of debt, earning an overall "GREAT" Financial Health Score from InvestingPro, which offers 14 additional insights on this stock through its comprehensive Pro Research Report.
In other recent news, Super Micro Computer reported its first-quarter fiscal 2026 earnings, which did not meet analysts’ expectations. The company announced earnings per share (EPS) of $0.35, missing the anticipated $0.46. Revenue for the quarter was $5 billion, falling short of the forecasted $6.46 billion. This revenue figure, however, aligns with the company’s earlier pre-announcement of approximately $5 billion. Following these results, Mizuho adjusted its price target for Super Micro Computer, lowering it to $45 from $50, while maintaining a Neutral rating. These developments highlight the challenges the company faces in meeting market expectations.
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