A NVIDIA Q4 Earnings Preview: Upside Should Come From EPS Growth

Deutsche Bank expects NVIDIA Corporation NVDA to report fourth quarter EPS above Street when it announces its quarterly results on Thursday.

Analyst Ross Seymore expects EPS of $0.84, higher than Street’s $0.83 estimate and revenues of $2.14 billion, versus Street’s $2.10 billion. The company expects revenue of about $2.1 billion.

Seymore noted that Nvidia has a consistent beat pattern, with reported revenues above the mid-point of guidance for the past six quarters by an average beat of 11 percent.

“PC data points during the quarter were better than expected, which supported above-consensus PC-related results by Intel and AMD,” Seymore wrote in a note.

On a sequential basis, the analyst expects Gaming revenues to be up 10 percent and estimate Datacenter sales grew 5 percent and models Provisualization up 2 percent.

However, Seymore expects a seasonal decline in the first quarter and anticipates 7 percent sequential drop in revenue. Segment wise, the analyst sees Gaming to decline 10 percent sequentially, while projecting 10 percent growth in Datacenter business.

That said, the analyst projects first quarter EPS of $0.71 on revenue of $2 billion, above Street’s $0.64/$1.88 billion.

“We expect the company to guide for continued strength in PC gaming (albeit still down q/q), offset partially by a seasonal decline in game console-related builds for Nintendo,” Seymore continued.

The analyst maintained his Hold rating on shares, despite being positive on execution and margin improvements. Amid high growth expectations, Seymore says further share price appreciation will have to come from EPS growth rather than valuation expansion.

At last check, shares of Nvidia rose 2.62 percent to $120.38 after setting a new 52-week high of $120.90. Seymore has a price target of $75.