Super Micro Computer (SMCI +24.38%) stock was battered again in Friday's trading. The server company's share price ended the session down 6.8%, according to data from S&P Global Market Intelligence.
Supermicro's latest slide followed news that JPMorgan's analysts had lowered their rating on the stock from overweight to neutral and cut their price target on it from $950 per share to $500 per share. Additionally, the Labor Department's jobs report Friday showed that only 142,000 jobs were added to the U.S. economy in August, falling short of Wall Street's expectation that 160,000 jobs would be added.
Supermicro's share price is now down 67.5% from the high it reached earlier this year. Should investors consider buying the stock in the lead-up to the company's stock split on Oct. 1?
NASDAQ: SMCI
Key Data Points
Supermicro stock is a buy for risk-tolerant investors
Super Micro Computer has been hit with a series of bearish news events recently. The company's fiscal fourth-quarter report arrived in early August with margins that spooked the market and pointed to some rising competitive pressures. Then in late August, Hindenburg Research published a scathing short report on the stock. Supermicro also announced that it was delaying the filing of its 10-K report for its fiscal 2024, which ended June 30.
Now, JPMorgan has downgraded the stock and dramatically reduced its price target.
The bearish indicators seem to be piling up, but I think the significance of some of them is being overblown. For starters, investors should keep in mind that Hindenburg Research is a short-seller that profits when a stock it has bet against goes down. Additionally, Supermicro has reiterated that it does not expect to make any material changes to the results it has already reported for fiscal 2024.
And Friday's note from JPMorgan? While the company lowered its price target, its new 12-month forecast for a $500 per share price still suggests upside of roughly 29% compared to Friday's closing price.
Supermicro isn't a low-risk stock, but the shares, trading at roughly 11 times this year's expected earnings, look cheaply valued. For investors with a higher tolerance for risk and volatility, buying the stock at these levels could have a big payoff down the road.
