Market Overview

Nvidia Bears Still Exist: Wells Fargo Keeps Stock Rated Underperform

Nvidia Bears Still Exist: Wells Fargo Keeps Stock Rated Underperform
Related NVDA
Vetr Crowd Upgrades Nvidia To Strong Buy
Vetr Crowd Downgrades Nvidia
Stock Market Volatile, But This Top Retail Stock Breaks Out (Investor's Business Daily)

NVIDIA Corporation (NASDAQ: 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.

Related Links:

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

Latest Ratings for NVDA

Feb 2018BMO CapitalMaintainsMarket PerformMarket Perform
Feb 2018B. RileyMaintainsBuyBuy
Feb 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight

View More Analyst Ratings for NVDA
View the Latest Analyst Ratings

Posted-In: David Wong semiconductor Wells FargoAnalyst Color Price Target Analyst Ratings Best of Benzinga


Related Articles (NVDA)

View Comments and Join the Discussion!