Nvidia (NASDAQ:NVDA) is heading into the earnings confessional this Thursday, and BMO analyst Ambrish Srivastava remains skeptical whether the stock is a sound investment. Although, this should be no surprise as the valuation at current levels looks stretched.
Nvidia has beaten Street expectations for sales and profits for 11 consecutive quarters. That’s one of the reasons why the stock is up a whopping 1,020% over the last 3 years.
Srivastava reiterates a Market Perform rating on Nvidia stock, with a price target of $225, which represents a potential downside of 13% from where the stock is currently trading.
Srivastava opined, “We believe fundamentals remain strong, the company continues to execute well and a major concern from earlier in the year, i.e., cryptocurrency weakness, is likely not a factor given various other drivers for the business. However, we see better opportunities from a return perspective elsewhere in our coverage and continue to rate shares Market Perform. For FY2Q19, we expect revenues of $3.10 billion, down 3% q-q and GAAP EPS of $1.65, roughly in line with consensus. For FY3Q19, we expect revenues of $3.38 billion, up 9% q-q and EPS of $1.83, vs. consensus’ $3.33 billion, up 7% q-q and $1.79.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ambrish Srivastava has a yearly average return of 12% and a 72.5% success rate. Srivastava has a -49.5% average return when recommending NVDA, and is ranked #536 out of 4847 analysts.
Most of the Street is far more confident than Srivastava’s sidelined stance, with TipRanks analytics showcasing NVDA as a Strong Buy. Based on 13 analysts polled in the last 3 months, 10 rate a Buy on Nvidia stock while 3 maintain a Hold. The 12-month average price target stands at $299.91, marking a nearly 15% upside from where the stock is currently trading.
Net net, As of this writing Nvidia shares are trading at $259.285, up $3.165 or 1.24%.