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What To Do With Nvidia's Stock After 20% Fall?

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What To Do With Nvidia's Stock After 20% Fall?

Chipmaker Nvidia Corporation (NASDAQ: NVDA) reported Thursday its third-quarter results in which revenue fell short of expectations and management's guidance for the fourth quarter also missed.

Here is a summary of how some of the Street's top analysts reacted to the print and the stock's sharp sell off.

The Analysts

  • Barclays' Blayne Curtis maintains an Overweight rating on Nvidia with a price target lowered from $300 to $250.
  • Bank Of America's Vivek Arya maintains at Buy, price target lowered from $300 to $250.
  • Tigress Financial Partners' Ivan Feinseth comments on Nvidia's stock in his daily newsletter.
  • Mizuho Securities' Vijay Rakesh maintains at Buy, price target lowered from $295 to $245.
  • Citi's Atif Malik maintains at Buy, price target lowered from $270 to $244.
  • Raymond James' Chris Caso maintains at Outperform, price target lowered from $300 to $250.
  • BMO Capital Markets' Ambrish Srivastava maintains at Market Perform, price target lowered from $225 to $175.
  • Wells Fargo's Aaron Rakers maintains at Outperform, price target lowered from $315 to $235.

Nvidia's stock was trading around $165.03 at time of publication Friday, down 18.6 percent.

Barclays: 'Setback' Quarter

Nvidia's revenue miss and disappointing revenue guidance is "certainly a setback" for the company, Curtis said in a note. Specifically, the company worked through GPU inventory of its mid-range Pascal products and data center revenue growth cooled down but is still "growing nicely. Gaming was a contributor to the poor guidance, but could normalize with the launch of a mid-range Turing in the first half of 2019.

Investors may want to consider taking advantage of the weakness in Nvidia's stock as the company's outlook is "likely better from here."

Bank Of America: Still A Best In Class

Nvidia's report reaffirms the company's status as a best-in-class semiconductor company despite a worse-than-expected excess channel inventory impact, Arya said. Data center sales were short of consensus estimates, but rose 58 percent from last year with no signs of slowing down and a strong pipeline of data-center inference products could help support a 40-percent growth rate.

Tigress: 'Tremendous' Opportunity

Investors should take advantage of the "tremendous" long-term opportunity by buying Nvidia's stock, Feinseth said. The company's earnings report looks disappointing but the weakness from cryptocurrency was always seen as a short-term opportunity that would "fade eventually."

See Also: How Nvidia Historically Trades After Earnings

Raymond James: Disappointing Reset

Nvidia's third quarter print and guidance represents a "disappointing" reset to the near-term narrative, Caso said. Specifically, it's evident management doesn't have a "handle on the effects" of cryptocurrency on the gaming business and its outlook reflects "aggressive" steps to mitigate the issue. Management may have made the wrong decision in no longer shipping mid-range GPUs, which represents one-third of gaming volume for the January quarter to clear its inventory.

The company's issues are likely "transitory" and has no impact on the long-term outlook. As such, Caso said the stock is set up to potentially benefit from near-term catalysts next year.

BMO: No Growth Next Year

Tthe cryptocurrency industry helped boost the gaming business more than initially expected through an uptick in average selling prices, Srivastava said. The cryptocurrency opportunity is gone for at least the near term and even assuming a strong double-digit growth in data center next year, there's a "high likelihood" Nvidia won't grow at all in 2019.

Wells Fargo: Frustration

Nvidia's concerns transformed into frustration in the third quarter after a notable gaming channel inventory burn-off failed to take place, Rakers said. The near-term "painful" outlook is nevertheless overshadowed by Nvidia's long-term competitive advantage and growth opportunities.

Mizuho: Buy On Weakness

Nvidia's stock should be bought by investors as the long-term story remains intact, Rakesh said. The company should see continued growth from its exposure to key segments including data center and automotive. The Pascal inventory buildup should be worked through as early as the current quarter.

Rakesh said Nvidia's stock faces notable upside given its transformation towards a key platform provider with expertise across graphics, computing, deep learning, artificial intelligence for high-performance computing, cloud data centers, among others.

Citi: Longer-Term Outlook

Investors should be "very bullish" on Nvidia's growth prospect for 2019 given its market expansion and new product releases, Malik said. The company boosted its share buyback program to $7 billion with another $3 billion allocated to shareholder returns over the next five quarters alone. The stock also faces a potential catalyst in early 2019 at the Consumer Electronics Show.

Loup Ventures: 'Three Tech Waves'

Over the long term, Nvidia will be a key beneficiary of the "three massive tech waves," including gaming, data center, and automotive, according Gene Munster.

Latest Ratings for NVDA

DateFirmActionFromTo
Feb 2019Atlantic EquitiesInitiates Coverage OnOverweight
Feb 2019BernsteinDowngradesOutperformMarket Perform
Jan 2019NeedhamDowngradesBuyUnderperform

View More Analyst Ratings for NVDA
View the Latest Analyst Ratings

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