UPDATE: Bank Of America Upgrades NVIDIA

Bank of America upgraded NVIDIA Corporation NVDA Friday from Underperform to Neutral and raised its price target from $19 to $22.

Analysts led by Vivek Arya commented that “Nvidia has performed very well per our scorecard analysis, and we see the company as a major beneficiary of the cost-cutting at main discrete graphics comp AMD. In addition we like Nvidia’s growth in parallel computing (GPGPU) in the data center, and its large pipeline of wins in automotive.”

“The choice of 14.5x PE is in-line with the sector, and is supported by a strong balance sheet with $5/sh in net cash (25 percent of mkt cap), dividend payout and consistent buybacks,” according to the analyst note.

Arya concluded that the “reason we are not more positive is due to the potential expiration of the royalty arrangement between Nvidia and Intel that is set for early 2016 (from cash perspective) and early 2017 (from P&L perspective). These royalties account for ~25 percent of ongoing EPS.”

NVIDIA recently traded at $20.28, up 0.29 percent.