SMCI Stock On Track For Best Single-Day Gains In 15 Months As Margins Pump Up Wall Street And Main Street

• Analysts at Citi raised their price target for SMCI stock to $31 from $25, while keeping a ‘Neutral’ rating.
• The firm cited Super Micro’s margin surge as the reason for its price target hike, noting that it also drove an earnings beat.
• Mizuho analysts also hiked their price target for Super Micro following Q3 results, raising it to $30 from $25 while keeping a ‘Neutral’ rating.

Shares of Super Micro Computer Inc. (SMCI) soared more than 17% on Wednesday ahead of the opening bell after the company’s gross margins in the third quarter (Q3) beat expectations of both Wall Street and Main Street.

Super Micro Computer reported an improvement in its gross margins on both a sequential and year-on-year basis. The company’s CEO cited the margin recovery and growth in the data center business as proof that its business remained robust.

If Super Micro shares hold their pre-market gains during the regular trading session, this would be SMCI stock’s best single-day surge in nearly 15 months.

Wall Street Turns Optimistic On SMCI Stock

According to TheFly, analysts at Citi raised their price target for SMCI stock to $31 from $25, while keeping a ‘Neutral’ rating.

The firm cited Super Micro’s margin surge as the reason for its price target hike, noting that it also drove an earnings beat.

According to an Investing.com report, analysts at Mizuho also hiked their price target for Super Micro following Q3 performance, raising it to $30 from $25 while maintaining a ‘Neutral’ rating.

The firm stated that helping drive Super Micro’s Q3 margins were lower expedited fees, tariff relief, and an improved mix of customers and products. However, Mizuho expects Super Micro’s fourth-quarter (Q4) margins to decline 180 basis points on a sequential basis due to customer and product mix.

According to Koyfin data, the average 12-month price target for SMCI is $33.2, implying an upside of 19% from current levels. Of the 18 analysts covering the stock, five have a ‘Strong Buy’ or ‘Buy’ recommendation, nine have a ‘Hold’ rating, while four have a ‘Sell’ or ‘Strong Sell’ advice.

Main Street Is Also Bullish On SMCI

Retail sentiment on Stocktwits around SMCI trended in the ‘extremely bullish’ territory with message volumes at ‘extremely high’ levels. SMCI was among the top trending tickers on Stocktwits at the time of writing.

One bullish user stated that now is the real opportunity to buy SMCI stock at lows of $30.

Another user cited gross margin improvement to state that the SMCI stock will rise significantly.

SMCI’s Q4 Guidance, Margins Overshadow Mixed Q3 Performance

Super Micro’s mixed Q3 performance was overshadowed by the company’s improved margins during the quarter, as well as the guidance for Q4.

Super Micro reported earnings per share (EPS) of $0.74 on revenue of $10.2 billion, compared to Wall Street estimates of an EPS of $0.62 on revenue of $12.45 billion, according to Fiscal.ai data.

The company’s gross margins in Q3 stood at 9.9%, compared to 9.6% during the year-ago period and 6.3% in the second quarter (Q2).

“Supermicro's transformation into a total datacenter infrastructure provider is accelerating. With the addition of our new US manufacturing facilities in Silicon Valley, we are exceptionally well-positioned to meet the massive demand for various AI and enterprise verticals,” said Super Micro CEO Charles Liang.

The company guided for an EPS of $0.65 to $0.79 in Q4 on revenue of $11 billion to $12.5 billion. This compares well to a consensus estimate of an EPS of $0.56 on revenue of $11.3 billion.

SMCI stock is down 5% year-to-date and 13% over the past 12 months. The S&P 500 ETF Trust (SPY) is up 28% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 40%.

The iShares Semiconductor ETF (SOXX) is up 156% during this period, while the iShares Russell Mid-Cap ETF (IWR) is up 23%.

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