SMCI: JPMorgan says watch these two points after special committee review

Investing.com-- Super Micro Computer Inc (NASDAQ:SMCI ) announced the completion of a review by an Independent (LON:IOG ) Special Committee on Monday that claimed to find no evidence of misconduct by the management or board. 

JPMorgan analysts noted that there were “modest lapses,” and outlined two points to watch after the independent review.

Firstly, the brokerage said focus will be on whether Super Micro’s new independent auditors, BDO, accept the findings of the special committee, or undertake their own independent review.

The server maker had appointed BDO as its new auditor in mid-November after persistent delays in the filing of its 2024 year-end report to the SEC. 

Secondly, JPM said investors should watch whether the Nasdaq supports Super Micro’s request for an extension of time to regain compliance with listing rules. The company had in November said it will file its 2024 financials. 

Super Micro’s shares jumped nearly 29% after the release of the independent committee review on Monday. The committee recommended that the server maker replace its Chief Financial Officer, appoint a Chief Accounting Officer and a Compliance Officer, while also strengthening its legal department and improve its compliance-related training. 

Super Micro shares are trading up about 47% so far in 2024, but are nursing a steep tumble from their annual highs after the firm repeatedly delayed filing its annual reports. The firm was also accused of accounting malpractice by short seller Hindenburg Research.

Still, the company has benefited greatly from its exposure to the rapidly-growing artificial industry. The firm sells servers geared towards running advanced AI programs.

JPM had recently cut the stock to Underweight. 

Source: Investing.com