Investors should be prepared for a possible big move in Nvidia (NVDA) stock — either up or down. The graphics giant has been regularly putting up strong growth numbers in recent quarters, which has trained market participants to expect big beats. So shares could be hit hard if Nvidia fails to turn in a notable beat when it reports earnings after the market close tomorrow. That said, expectations probably have come down recently, thanks to disappointing earnings results and outlooks from other chip companies. This could help temper the market reaction with respect to the current quarter’s results.
To help you prepare, here is what BMO’s Ambrish Srivastava is expecting: “We are not that far off from consensus estimates. For FY3Q, we are a little higher than consensus for the Datacenter business, while a little lower for the Pro Vis business. For FY4Q, we are a touch lower for Datacenter and a touch higher for Gaming. For FY3Q19, we expect revenues of $3.25 billion, up 4% q-q and GAAP EPS of $1.72, roughly in line with consensus. For FY4Q19, we expect revenues of $3.42 billion, up 5% q-q and EPS of $1.86, vs. consensus’ $3.40 billion, up 5% q-q and $1.82.”
“As a reference point to what the disappearance of the crypto business means for the GPU industry, which we believe was a huge help in 2017 into early 2018, VGA card shipments in 3Q were down 15% q-q and down 37% y-y, coming off a worse than seasonal 2Q. For 3Q, recent normal seasonality (3-year avg./5-year median) is for units to increase 32% q-q/14% q-q,” the analyst added.
Bottom line: Srivastava remains sidelined on Nvidia stock with a Market Perform rating and price target of $225, which implies an upside of 14% from current levels. (To watch Srivastava’s track record, click here)
How does Srivastava’s bullish bet weigh in against the Street? It appears the analyst is not the only one enthusiastic on this chip giant’s prospects, with TipRanks analytics demonstrating NVDA as a Strong Buy. Out of 27 analysts polled in the last 3 months, 21 are bullish on Nvidia stock while 6 remain sidelined. With a return potential of nearly 45%, the stock’s consensus target price stands at $286.16. (See NVDA’s price targets and analyst ratings on TipRanks)