NVidia Guides For A Significant Estimate Beat In Q3

NVIDIA Corporation NVDA reported its 2Q results marginally ahead of expectations, but guided to significantly higher-than-expected growth in 3Q. Deutsche Bank’s Ross Seymore maintained a Hold rating on the company, with a price target of $51.

Slight F2Q Beat

NVidia reported its revenue for the quarter at $1.43 billion, representing 9 percent sequential growth and ahead of the DB estimate of $1.36 billion as well as the Street expectation of $1.35 billion. The upside was driven by Gaming and Provisualization. The EPS came in at $0.40, better than the DB estimate of $0.38 and the Street expectations of $0.37.

Impressive Growth In F3Q

NVidia guided to revenue of $1.68 billion, well ahead of the DB estimate of $1.44 billion and the Street’s $1.45 billion. Seymore expects Gaming to growth 25 percent q/q and lead the company’s growth, “driven by a full quarter of the recently-launched GPUs (Pascal) and seasonality.” Datacenter is expected to remain strong and grow 25 percent q/q.

The analyst raised the EPS estimates for F3Q17, FY17 and FY18 from $0.40 to $0.53, from $1.51 to $1.80 and from $1.40 to $1.80, respectively.

Although NVidia’s execution and performance were impressive, “much of this is reflected in its premium valuation,” Seymore commented.

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