NVIDIA Posts Strong Quarter Despite Weakness In Tegra

In a report published Thursday, Morgan Stanley analyst Joseph Moore reiterated an Underweight rating on

, and raised the price target from $17.00 to $19.50. In the report, Morgan Stanley noted, "A solid quarter, as strength in gaming continues to surprise and drive upside in GMs despite shortfalls in Tegra. We have been too cautious on the stock, as continued strength in margins is diluting the percentage of earnings that comes from the finite-life Intel royalty." The report continued, "Still, we think our valuation methodology (which strips out Intel from ongoing earnings, and values on sum of the parts cash+royalty+15x 2016 EPS) is the right way to value the company,and on that metric the stock remains expensive. Further, at year end we'd expect Street estimates to extend to 2017, which excludes the Intel royalty, so this issue starts to be built into Street #s. We remain UW, but take our price target up." NVIDIA Corporation closed on Wednesday at $20.81.