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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 . Scalper1 News
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