Sterne Agee Maintains Neutral Rating On NVIDIA

According to Sterne Agee, NVIDIA

reported F1Q12 (Apr) revenues/EPS of $962M/$0.27 versus consensus of $948M/$0.19. Sterne Agee said that revenue was better than seasonal expectations and mostly attributed to stronger Tegra2 and desktop GPU revenues and also stronger gross margins of 50.6%, almost 230bps better than guide driven by product mix to desktops. “Maintaining our Neutral on NVDA. NVDA is seeing good traction with the Tegra2, but we believe the SandyBridge and Llano could pose challenges. Tegra should potentially have more design wins in the handset space as a graphics processor on Samsung S2 galaxy phones also. Revising our F12E from prior $4.19B/$1.05 to $4.18B/$1.08 and F13E from $4.41B/$1.10 to $4.42B/$1.05, respectively. NVDA is trading ~16.5x forward P/E compared to the rest of our coverage group trading at ~10x forward P/E. We believe NVDA is fairly priced compared to competitors as Opex picks up.” NVIDIA closed yesterday at $20.50.