Analysts Just Made A Substantial Upgrade To Their Super Micro Computer, Inc. (NASDAQ:SMCI) Forecasts

Super Micro Computer, Inc. (NASDAQ:SMCI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.

After this upgrade, Super Micro Computer's eight analysts are now forecasting revenues of US$9.8b in 2024. This would be a huge 48% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 8.5% to US$12.14. Previously, the analysts had been modelling revenues of US$8.1b and earnings per share (EPS) of US$10.92 in 2024. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Super Micro Computer

It will come as no surprise to learn that the analysts have increased their price target for Super Micro Computer 25% to US$288 on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Super Micro Computer analyst has a price target of US$401 per share, while the most pessimistic values it at US$65.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Super Micro Computer's growth to accelerate, with the forecast 37% annualised growth to the end of 2024 ranking favourably alongside historical growth of 14% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.0% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Super Micro Computer is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Super Micro Computer could be worth investigating further.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Super Micro Computer going out to 2026, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.