Analyst Rick Schafer Bets on NVIDIA Corporation (NVDA) Ahead of FQ3 Showcase

Rick Schafer: Data center and gaming momentum will bode well for NVDA's anticipated quarterly outclass.


As NVIDIA Corporation (NASDAQ:NVDA) gears up to deliver its third fiscal quarter results for 2018, Oppenheimer analyst Rick Schafer has his expectations aiming for a beat thanks to strength in data center and gaming strides forward.

While the Street is calling for $2.36 billion in revenue and $0.95 in EPS for the third fiscal quarter, and $2.44 billion in revenue coupled with $0.98 in EPS for the fourth fiscal quarter, Schafer is telling investors to look out for upside ahead.

Schafer previews: “Cryptocurrency, 7% of F2Q (July) revenue, should provide a lift to F3Q results; however, we expect management to continue to take a conservative tone when forecasting this volatile vertical. While data center just missed lofty expectations in F2Q, up only 2% Q/Q, the segment still increased nearly 300% Y/Y. We expect sequential growth to reaccelerate as NVDA’s latest GPU AI accelerators ramp in more volume. Competitively, we do not see any material pressure from AMD’s Radeon Instinct server accelerators, or high-end Vega PC GPUs. Net, while we expect another beat/raise quarter from NVDA, with shares up 94% YTD and trading at 50x our CY18 estimate (~2.75x slower growth peers), we remain sidelined here as expectations are running high.”

Down the line, “We expect continued strength in gaming, albeit a slower second derivative of growth as comps become increasingly difficult,” contends Schafer, who even as gaming sets “a high bar,” remains cautiously optimistic on Nvidia’s prospects.

As such, in anticipation of the print, the analyst maintains a Perform rating on NVDA stock without suggesting a price target. (To watch Schafer’s track record, click here)

Most on the Street are in a bullish camp when it comes to this chip maker, TipRanks analytics exhibit NVDA as a Buy. Out of 25 analysts polled by TipRanks in the last 3 months, 15 are bullish on Nvidia stock, 7 remain sidelined, and 3 are bearish on the stock. With a loss potential of nearly 14%, the stock’s consensus target price stands at $181.14.