NVIDIA Corporation (NDVA) Just Delivered Stellar Earnings Report: Analysts Weigh In

NVIDIA Corporation (NASDAQ:NVDA) shares are on the rise after the graphic-chip maker released its “stellar” earnings report for the first quarter of 2017. After reviewing the report, analysts from Roth Capital and Susquehanna came out with recommendations for the stock.

NVIDIA outperformed by far Roth Capital’s expectations for Datacenter growth of 115% year-over-year and hit 186%. Its management reported revenues guidance range for next quarter of $1.95 billion, which is above consensus of $1.9 billion.

Roth Capital top analyst Brian Alger admits he was mostly skeptic about what the Gaming platform results would turn out to be, yet the platform rose by roughly 50% year-over-year. However, gaming sales equalled $1.03B, which marks a 24% downside quarter-over-quarter. Based on competitors’ performance, Alger considers this drop will not affect shares greatly in the future, although the rate is higher than anticipated. Additionally, Roth Capital updated their estimates for the FY18, and raised total revenues from $8.1B to $8.4B, as well as Non-GAAP EPS from $3.59 to $3.67.

“Incrementally, we are more bullish on NVDA’s stock. The exceptional growth in Datacenter, coupled with more modest gaming revenues means that the revenue split is becoming more balanced (although still heavily weighted towards gaming). Our model assumes that Datacenter growth slows somewhat from its current pace to finish up 120% on the year. However, we readily admit that it could as easily be up 150%, if current demand dynamics persist,” concludes the analyst.

Echoing Alger, Susquehanna analyst Christopher Rolland believes the chips maker’s earnings report was “better than expected”. However, “We believe challenges for Gaming were well understood and that these results surpassed low expectations. More importantly, DC filled the void with +38% QOQ growth driven by broader and deeper cloud adoption. That said, valuation (27.5x 2018E EPS) keeps us sidelined for now,” asserts the analyst.

As such, the analyst maintains a Neutral rating listing a price target of $110, which represents a downside close to 9% compared to where the shares last traded.

According to TipRanks, a financial engine that measures and ranks analysts’ and bloggers’ performance, analysts Brian Alger and Christopher Rolland generate a yearly average return of  137.8%  and 0.0% when recommending NVDA shares,  respectively. Alger has a success rate of 66% and is ranked #55 out of 4564 analysts, while Rolland has a success rate of 62% and is ranked #439.

TipRanks analytics show NVDA as a Moderate Buy. Based on 19 analysts offering recommendations for this share, 11 issue a Buy, 5 maintain a Hold and 3 recommend a Sell. The 12-month average price target stands at $122.29, making a nearly 5% downside from where the stock is currently trading.


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