SMCI stock given huge downgrade from $3 trillion banking giant

Few stocks have experienced a fall from grace as massive as the information technology giant Super Micro Computer (NASDAQ: SMCI). 

In fact, after being nothing short of a jaw-dropping performer in the first quarter of the year – and rising from $285 to about $1,200 between January and March – Supermicro entered a long period of decline.

Late in August, the decline turned into a freefall. 

First, Hindenburg Research announced it had taken a short position against SMCI shares, alleging lackluster compliance and a string of abuses. Subsequently, Supermicro’s postponement of its K-1 filing did little more than further shake investor confidence.

The dramatic price action was followed by a deluge of price target revisions, the latest of which, dated September 6, was a massive cut made by the banking giant JPMorgan (NYSE: JPM).

JPMorgan makes brutal revision of SMCI stock price target

In an investor note, analysts at JPMorgan announced they no longer consider Supermicro stock ‘overweight’ – ‘buy’ – but are turning neutral. The more shocking part of the notice was the price target revision, which lowered the forecast by a full $450 – from $950 to $500.

Still, the banking giant with nearly $3 trillion in assets under management (AUM) explained that the changes do not reflect a long-term lack of confidence in SMCI but rather ongoing turbulence and uncertainty.

Indeed, experts with JPMorgan have simultaneously expressed their confidence that Supermicro will be able to clear the roadblocks, come back into compliance, and, in turn, restore its growth potential in the long run.

Despite the bullish undertones, however, the banking giant acknowledged the existence and severity of current issues and cited the uncertainty resulting from these factors as the main reason behind the downgrade.

SMCI stock price chart

JPMorgan’s long-term faith in Supermicro is also visible in the new price target to some extent. Though the drop from $950 to $500 is significant, it is worth pointing out that the new forecast still constitutes a significant – 23.10% – upside from the SMCI price today of $406.17.

On the other hand, while the analysts remain moderately confident in Super Micro Computer, investors’ lack of such confidence is more than evident in the company’s stock market tumble. 

In the last 30 days of trading, SMCI shares are down 17.43% and the long-term nature of the decline that preceded the most recent shocks is evident in the stock being 61.62% in the red in the last six months.

Experts and analysts weigh in on the future of SMCI stock

Finally, despite the long decline and the even deeper crash, JPMorgan is not the only entity with some confidence in Supermicro’s prospects. For example, technical analysis (TA) conducted by a user known as TradingShot on the stock analysis platform TradingView indicates SMCI might, after all, rocket to $2,000.

Rosenblatt’s Hans Mosesmann has also provided a more optimistic view, arguing that Supermicro’s business remains healthy and that there should be no major obstacles to recovery once the compliance issues are resolved.

Still, some prominent firms, such as Wells Fargo (NYSE: WFC), were quick to adopt a darker outlook. Indeed, Wells Fargo analysts were quick to downgrade their SMCI price target to $375 already in late August. Though acknowledging the new air of uncertainty and lowering the forecast, the banking giant retained a ‘neutral’ stance on Supermicro.

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