NVIDIA Corporation NVDA, one of the hottest stocks over the last two years, reported its third-quarter earnings, which could re-start the bull versus bear debate as the stock trades at an all-time high and investors question what is an appropriate valuation moving forward.
The Analyst
Wells Fargo's David Wong.
The Rating
Wong Maintains an Underperform rating on Nvidia's stock with a price target raised from $75 to $87.
The Thesis
Nvidia's earnings report showed "impressive" sales momentum, which grew 18 percent sequentially and 32 percent year-over-year, Wong said in a note. GAAP gross margin improved from 58.4 percent in the prior quarter to 59.5 percent. The company also showed revenue growth on a sequential and year-over-year basis across every segment, except OEM & IP which saw a 24 percent drop sequentially but was up 3 percent year-over-year.
Despite Nvidia's clearly "strong product offerings" across multiple high growth markets, the stock's valuation needs to be considered. The analyst's fiscal 2019 EPS estimate was boosted from $3.45 to $4.34 and an appropriate price target multiple on 2019 EPS is 20x which implies an $87 price target.
Price Action
Shares of Nvidia were trading higher by more than 5 percent early Friday morning at $215.92, which is above the prior 52-week high of $212.90.
Expectations Mount For Nvidia; Analyst Raises Target To $190 Ahead Of Earnings
Sizing Up The Sizzle In Semiconductor ETFs
Image Credit: By yoggy0 from Yokohama, Japan (SIGGRAPH Asia 2009) [CC BY 2.0], via Wikimedia Commons© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
