Super Micro Computer stock price target raised by Citi to $52 from $37

Investing.com - Citi has raised its price target on Super Micro Computer (NASDAQ:SMCI) to $52.00 from $37.00 while maintaining a Neutral rating on the stock. The company, currently trading at a P/E ratio of 25.5x, has demonstrated impressive revenue growth of 82.5% over the last twelve months, according to InvestingPro data.

The research firm cited continued broader industry demand for Super Micro’s products, though it noted this demand remains lumpy. Citi pointed to the significant ramp-up of GB200/300 products that began in May and growing demand in the sovereign and enterprise AI markets.

Super Micro management has indicated that current commitments should materialize over the next two quarters as constraints on Blackwell GPU supply ease, according to Citi’s analysis.

Despite growth expectations, Citi expressed concerns about margins due to increased competitive efforts from DELL and HPE, which could limit margin expansion for Super Micro Computer.

The higher price target reflects an increased P/E multiple of 13.5x applied to Citi’s FY27 estimates, up from 9-10x previously, which the firm attributed to an uptick in multiples for AI peers and broader market multiple movements.

In other recent news, Super Micro Computer has been active with several developments. The company announced the pricing of $2 billion in convertible senior notes due 2030, with an option for initial purchasers to acquire an additional $300 million in notes. Supermicro expects to receive approximately $1.96 billion in net proceeds, which will be used for various corporate purposes, including share repurchase and growth funding. Additionally, Supermicro’s BigTwin server with 5th Gen Intel (NASDAQ:INTC) Xeon Scalable processors received industry immersion cooling certification from Intel, promising more efficient cooling solutions for data centers.

On the financial analysis front, Citi raised its price target for Super Micro Computer to $52, while Mizuho (NYSE:MFG) adjusted its price target to $47, both maintaining a Neutral rating on the stock. Mizuho’s adjustments reflect strong AI server demand and robust orders from Tier 2 cloud service providers. KeyBanc initiated coverage with a Sector Weight rating, citing the competitive server market and potential pressure on margins as concerns. Despite growth expectations, KeyBanc noted challenges with Super Micro’s profitability and recent accounting missteps. These developments indicate a cautious yet optimistic outlook from analysts on Super Micro’s future performance.

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