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Super Micro Computer Stock Dives, Breakout Fails After Profit Warning

Highly rated small cap Super Micro Computer ( SMCI ) lowered its third-quarter estimates after the close Thursday and then watched its stock crash Friday. Super Micro stock plunged nearly 19% in heavy afternoon trading in the  stock market today , near 27. The stock had made a breakout at 33.89 from a cup-with-handle base, but that breakout has now failed. Scheduled to announce Q3 earnings after the close April 28, Super Micro founder and CEO Charles Liang said late Thursday in a preannouncement that the quarter ended March 31 turned out “weaker than forecast due to weaker demand with some large customers and the channel than we anticipated. January and February were particularly soft, while March showed improved momentum. Storage and data center continued to grow.” Except for the reference to March, there was “little detail on going-forward expectations,” Needham analyst Richard Kugele said in a Thursday research note. “We see great risk to the company’s goal of 20%-plus annual revenue growth and expect the stock will return to the penalty box, at least until further clarity is provided on the April 28 call.” IBD’s Take: Super Micro had been hot, but a breakout failed. How does the stock stack up? Find out at IBD Stock Checkup Kugele, though, said he still likes the company in the long term and that it’s outpacing the broader server/storage market. He reiterated his buy rating and 36 price target on Super Micro. Super Micro said Q3 revenue will come in at $530 million to $533 million instead of $530 million to $580 million. It now sees non-GAAP EPS of 33 cents to 35 cents vs. earlier guidance of 43 cents to 53 cents. Wall Street consensus had been 49 cents minus items, up 4% from the year-earlier quarter, and sales of $557 million, up 18%, Kugele said. Thomson Reuters on Friday cited consensus of six analysts on non-GAAP EPS of 46 cents and of seven analysts on revenue of $552 million. The preannouncement offered no guidance. Thomson Reuters put consensus on the current fiscal Q4 EPS minus items at 66 cents on revenue of $650 million vs. 57 cents on $574 million a year earlier. With an IBD Composite Rating of 98, Super Micro Computer ranks the best among all members of IBD’s Computer-Hardware/Peripherals industry group. But it’s also one of the smallest, with a market cap of $1.35 billion. The largest, Canon ( CAJ ), with a $32.68 billion market cap, carries a 37 CR, followed by newly reorganized HP Inc. ( HPQ ), with a $21.9 7 billion market value and a 47 CR. Canon stock was down a fraction intradayFriday, while HP stock was up a fraction. Image provided by Shutterstock .

HP Acquisition Of 3D Systems ‘Unlikely’; Citi Downgrades DDD

It’s “highly unlikely” HP Inc. ( HPQ ) will acquire 3D Systems, says Citigroup, which downgraded both 3D Systems ( DDD ) and its rival Stratasys ( SSYS ) on valuation after their stocks jumped on Thursday. HP plans to enter the 3D printer market this year. 3D System stock was down 4% in early trading in the stock market today , after rising 10% on Thursday. Stratasys stock was down 8.5%, negating a 5.9% rise on Thursday. Another 3D printer maker, ExOne ( XONE ), was down more than 3% early Friday. Citigroup analyst Kenneth Wong downgraded 3D Systems to sell and downgraded Stratasys to neutral. “(3D System) shares have nearly tripled since troughing mid-February and have doubled year-to-date, despite (3D printer) market conditions that remain unsettled. We believe the upside scenarios from operational efficiencies upside to take-out potential are overstated,” said Wong in a research note. 3D Systems on April 4 named Vyomesh Joshi as its CEO. Joshi had been executive vice president of the imaging and printing business of HP, formerly Hewlett-Packard before its split last year. “We expect Joshi to bring a fresh set of eyes to DDD’s strategic growth and profit initiatives,” Wong said. “Investors believe Joshi’s HP roots enhance the possibility of an HP acquisition of DDD. While we see how bullish investors might connect the dots here, (we) believe that an acquisition by HP is highly unlikely.” Bank of America Merrill Lynch upgraded 3D Systems on Thursday to buy on views that Joshi will spark a rebound at the company. Stratasys’ stock run-up also raises valuation issues, said the Citigroup analyst. “We don’t believe ‘good enough results’ will be sufficient with the recent boost in sentiment, and with industry checks still soft, we believe near-term upside is limited,” said Wong. “Our conversations with those in the industry suggest unit volumes have held, but there has been a downshift in buying towards smaller lower priced systems. “Contrary to investor expectations, we still believe that under ‘normal’ operating conditions, SSYS can generate double digit margins.”

3D Printer Stocks Soar: BofA Sees New DDD CEO Ending ‘Bloated’ Costs

3D printer stocks 3D Systems ( DDD ) and Stratasys ( SSYS ) skyrocketed Thursday after Bank of America/Merrill Lynch went from bear to bull on 3D. 3D Systems jumped 10.1% to 18.12 on the stock market today , after hitting a nine-month high of 19.76 in the morning. Stratasys rose 5.9% to 29.35, breaking out of a base going back to late October. Bank of America gave 3D Systems a “double upgrade,” raising it to a buy all the way from underperform. It hiked its price target from 11 to 26. Why the sudden switch from bear to bull? BofA sees new CEO Vyomesh Joshi fueling a turnaround. Joshi had worked for HP Inc. ( HPQ ), running HP’s printing business. BofA sees Joshi improving profit margins by going after 3D’s “bloated cost structure.” “The past several years of our negative stance have been predicated on the company’s poor M&A strategy, choice of assets that did not have complete exposure to 3D printing, increasing investments in low margin areas like consumer (now exiting part of low end consumer) and an aggressive investment and channel strategy that led to a bloated cost structure and revenue headwinds,” BofA analysts wrote. BofA raised 3D EPS targets for 2016 by 2 cents to 30 cents, 2017 EPS revised up by 18 cents to 57 cents and 2018 EPS revised up to 71 cents from 43 cents. Smaller 3D printer makers ExOne ( XONE ) and Voxeljet ( VJET ) also rallied Thursday. ExOne jumped 7.6% to their best level since April 2015. Voxeljet climbed 8.6%. Related: 3D Printers Gaining Traction With Nike, Boeing HP Inc.