Analysts Cut Price Target as Super Micro (SMCI) Faces Margin Issues

October 10, 2012 9:11 AM EDT Send to a Friend
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Price: $33.89 +0.41%

Rating Summary:
    5 Buy, 4 Hold, 0 Sell

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Today's Overall Ratings:
    Up: 17 | Down: 28 | New: 35
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Given the relatively challenging macro environment, analysts from Needham and Compnay said yesterday's reduced revenue results at Super Micro Computer, Inc. (NASDAQ: SMCI) were "ok", but stressed that gross margin percent was disappointing.

"Declines in spot prices for HDD and memory late in Q negatively impacted GM% as volumes are largely committed to suppliers for Sept Q around June Q end, with somewhat limited flexibility on pricing," said analyst Glenn Hanus.

"SMCI customers generally expect SMCI system prices to reflect current pricing on HDD/memory. Importantly, SMCI believes that GM% on its technology (i.e., motherboard, power supply, chassis etc.) has held steady, and that GM issues were due almost entirely to vicissitudes in component prices vs. its supply contracts," said Hanus.

In response to the margin issues and somewhat light revenue, Needham cut its price target on Super Micro Computer to $17 (from $22), but maintained a Buy rating.

For an analyst ratings summary and ratings history on Super Micro Computer click here. For more ratings news on Super Micro Computer click here.

Shares of Super Micro Computer closed at $9.31 yesterday.


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