Investors are always looking for companies that are poised to beat earnings estimates and NVIDIA Corporation (NASDAQ:NVDA) could be the one they have been searching for. At least according to Susquehanna analyst Christopher Rolland.
The graphics chip giant has earnings coming up this evening, and Rolland expects better than expected results/outlook driven by: 1) Ethereum-related GPU sales (as much as $400 million, driven by white-hot demand for mining-related cards vs. NVIDIA’s flat to slightly down expectation); and 2) a combination of higher ASPs and market share for NVIDIA graphics cards in C4Q17.
“We raise our estimates to reflect the near-term strength. We do worry that increased mining profitability has generated the purchase of more and higher-priced cards that will not recur if Ethereum prices decline. These one-time purchases, combined with valuation (~48x C2018 adjusted EPS), make us cautious and we would look for the story to derisk before becoming more constructive,” Rolland wrote.
As such, Rolland reiterated a Neutral rating on NVDA, while raising his price target to $200 from $185, which implies a 10% upside from current levels. (To watch Rolland’s track record, click here)
Overall, the Street is divided on whether to be bullish or sidelined on this semiconductor player. Out of 23 analysts polled in the last 3 months, 11 rate a Buy on NVDA stock, 11 issue a Hold, while only one recommends a Sell. When considering if this stock is an overvalued or undervalued contender in the market, it is worthy of note that analyst expectations indicate an only 1.36% return, with the 12-month average price target standing at $225.90.