FBR Capital Maintains Market Perform on NVIDIA After Guidance Cut

FBR Capital Markets has published a research report on NVIDIA NVDA after the company cut calendar revenue guidance yesterday to below consensus estimates. In the report, FBR Capital writes, "While shares have been underperforming the broader chip market of late as near-term catalysts are few, we think shares could continue to be somewhat challenged in the near term without some broader PC shipment recovery. Further, management's 2012 target for NVIDIA Tegra shipments of $1B seems far away with 2011 customers like Motorola and LG moving away from Tegra, and with top new customer HTC badly losing share in the market. Despite the near-term negative bent, NVIDIA does have opportunities in the Amazon Kindle Fire 8.9-inch device, in Apple MacBooks, and in other areas not yet contributing meaningfully, like Windows on ARM's Project Denver and Icera baseband shipments (where we do not expect to see meaningful handset traction anytime soon). Finally, the firm has not had a CFO for some time, and still does not—somewhat worrisome in a company run by an engineering-oriented founder. Stepping back, we think shares are oversold in the $11–$12 range and overbought as they approach $20." FBR Capital Markets maintains its Market Perform rating and $17 price target on NVIDIA, which is currently trading down $0.67 from yesterday's $14.93 closing price.