Analyst Urges Investors to Buy NVIDIA (NVDA) Stock on Weakness — Before New Products Get Big Return
NVIDIA (NVDA) stock is inching its way back up the market after having a major fall over the course of the autumn season. At the end of August, one share of the chip company was $283.70. Yesterday it closed at $153.05. The stock is in recovery mode and Tigress analyst Ivan Feinseth says the recent weakness presents a good opportunity for investors to cash in — reiterating a Buy rating for NVDA. (To watch NVDA’s track record, click here)
Feinstein suggests “NVDA’s innovative ability” and “market-leading position” will bring it to the forefront for secular technology trends including artificial intelligence, more graphical and data visualization opportunities and an increase in data center. The analyst notes strong sales for the company’s new Turing-based Graphics Processing Units (GPU) caused an unexpected buildup of excess inventory of the Pascal-based GPUs, which came out in 2016: “We believe the excess Pascal GPU inventory will be worked down over the next few months and NVDA’s strong growth prospects will overcome near-term softness. Growing speed needs in e-sports and ongoing cloud migration are driving increased demand for NVDA’s GPUs in the gaming and data center markets. We had viewed cryptocurrency GPU demand as a bonus and always felt that it would fade at some point,” Feinseth said.
The analyst also points to other new developments within the company — like that NVIDIA is branching out into the science and medical fields, which are benefiting from the strength and speed of its (GPUs). There’s also an acceleration of users turning to Volta processors and DRIVE PX onboard computers that will lend to the rise of the auto industry. Feinseth suggests these new products and developments are reason to believe the stock is going up.
“NVDA’s leadership position in visual data processing and increasing opportunities in AI, deep learning, and ongoing data center adoption will continue to drive greater Return on Capital, increasing Economic Profit and greater shareholder value creation. We believe significant upside opportunity exists and recommend aggressive purchase at current levels,” Feinseth added.
The analyst reviewed the numbers from the past year and came up with his own score. For the 12-month period ending in October of 2018, net sales revenue increased 38.4% year-over-year from $8.98 billion to $12.42 billion with data center growth increasing 58%. Feinseth predicts an increase of 15.6%, boosting revenue up to $14.36 billion over the next twelve months.
TipRanks reviewed what other analysts have had to say about NVDA in the last three months. Out of 29 who are keeping up with the stock, 21 analysts are bullish and 8 are sidelined. The consensus price target is $230.67, which shows a 50.72% upside from where the stock is currently selling. (See NVDA’s price targets and analyst ratings on TipRanks)