Super Micro short report presents attractive entry point, says Northland

Northland analyst Nehal Chokshi notes that Super Micro Computer (SMCI) shares fell about 8% yesterday following the publication of a short report from Spruce Point that argues that shares should trade in-line with Wiwynn’s P/S multiple given that Super Micro now has a 22% customer that Spruce Point, and he, believes to be Meta (META). However, Chokshi believes Wiwynn is "a very poor comparable on the lowest quality valuation metric of P/S" and concludes that the moderate selloff "presents a very attractive point." Super Micro trades at a modest 20% discount to peers on the higher quality P/E metric, but he believes this will expand to "a material premium" due to the durability of the company’s growth opportunity. Chokshi reiterates Super Micro’s top pick status along with an Outperform rating and $165 price target on the shares.