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Top Analyst Finds Himself Hesitant on Nvidia (NVDA) Stock; Here’s Why


The 2019 Consumer Electronics Show (CES) officially started Tuesday, but it’s already been a busy week loaded with innovative technologies, new gadgets, and major announcements from the world’s largest hardware makers.

At Nvidia’s (NVDA) CES keynote, the company announced a new graphics card, the RTX 2060, and 40+ RTX laptop models from all major OEMs. Following the announcements, B Riley FBR’s top analyst, Craig Ellis met with NVDA’s CFO Collette Kress, to dig deeper into the news.

“Takeaways included both positives and negatives, though we are tilted to the former once incorporating show floor and partner checks. First, we sense NVDA’s arms are well around the 1060 channel inventory issue, and while resolution seems likely to linger into F1Q or even F2Q as we’ve feared, we gained further comfort there’s little expansion risk into high-end or very low-end products. Second, as we’d expected the new 2060 gaming card will rev rec in F4Q. While the 1060 inventory issue seems likely to materially mute demand versus a typical launch, absent other offsets that could cast our F4Q Gaming Platform estimate in a conservative light. We believe that’s a key reason shares languished again on the day. However, we believe once that’s more visibly and confidently behind, shares could more sustainably accelerate,” Ellis noted.

“We are incrementally more constructive on NVDA shares which we believe are in a bottoming process, though developments at the next print, or even GTC may be needed before we believe shares can move sustainably higher and with that our stance on the stock,” the analyst continued.

All in all, Ellis reiterates a Neutral rating for this stock with a price target of $190, which shows a potential upside of about 33%.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Craig Ellis has a yearly average return of 17.7% and a 56% success rate. Ellis has a 70% average return when recommending NVDA, and is ranked #70 out of 5,144 analysts.

If we turn to the Street in general, we can see that the stock also has a Buy analyst consensus rating. In the last three months, Nvidia has received 21 ‘buy’ and 9 ‘hold’ ratings. These analysts have an average price target on the stock of $228.81, which implies a potential upside of nearly 59%.

 

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