7 Risks Deutsche Bank Sees At NVIDIA
Deutsche Bank raised its price target on NVIDIA Corporation (NASDAQ: NVDA) Wednesday from $17 to $19 and maintained a Hold rating.
Analysts, led by Ross Seymore, were impressed by the strength and growth potential for GPUs and other sub-segments following the company’s Q4 earnings release but felt that much of the potential was already priced into the shares.
On Wednesday, the company reported fourth-quarter revenue of $1.25 billion, above estimates of $1.20 billion with EPS of $0.43 versus the estimated $0.29. Investors cheered the results and sent the stock soaring approximately 8 percent in the after hours session.
While the Q4 results were strong, Seymore cited seven risks for the company:
1. “Macro-related risks such as slower PC and workstation unit growth.”
2. “Lower sales of GPUs for gaming desktops/notebooks and lower Tegra sales for smartphone/tablet and automotive end-markets.”
3. “Market share losses in GPU and Tegra businesses.”
4. “Competitive and pricing pressure.”
5. “Product execution.”
6. “Changes in royalty income as IP licensing payment agreements may expire.”
7. “Litigation outcomes.”
The firm’s $19 price target was based on a P/E of approximately 15x the estimated CY2016 GAAP EPS. The multiple was discounted from the peer group’s 16x due to the potential risk from the Intel royalty in CY2017.
NVIDIA recently traded at $22.34, up 7.35 percent.
Latest Ratings for NVDA
|Dec 2016||Evercore ISI Group||Upgrades||Hold||Buy|
|Dec 2016||Loop Capital||Initiates Coverage On||Buy|
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