Nvidia (NASDAQ:NVDA) is warming up to post its second quarter results this afternoon, and one analyst sees a favorable setup as he expects well-documented choppiness in the gaming channel to be offset by continued robust datacenter demand and backlog.
Heading into Nvidia’s earnings, Cowen’s top analyst Matt Ramsay is out pounding the table on shares of Nvidia, reiterating an Outperform rating and price target of $325, which implies an upside of 26% from current levels.
Ramsay wrote, “While we do not expect a formal announcement regarding the timing of NVIDIA’s next generation Turing gaming GPU launch, we believe NVIDIA has likely been aggressive in the gaming channel ahead of its launch. While this may weigh on near-term margins slightly, it makes sense NVIDIA would look to aggressively price cards ahead of its first major gaming microarchitecture launch in nearly two years. While we believe NVIDIA essentially de-risked crypto by guiding it down ~2/3 Q/Q for F2Q, and we were not including any contribution going forward, the questions will undoubtedly be asked.”
“We would recommend investors not let any choppiness in a clearly transitional period distract from what we expect to be a powerful upgrade cycle when Turing launches this Fall. We would note that in the four full quarters after Pascal was released in May 2016, NVIDIA’s gaming GPU business grew an average 46% Y/Y,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Matt Ramsay has a yearly average return of 23.9% and a 64% success rate. Ramsay has a 134.3% average return when recommending NVDA, and is ranked #85 out of 4850 analysts.
Out of the 32 analysts polled in the past 12 months, 22 rate Nvidia stock a Buy, 9 rate the stock a Hold and 1 recommends a Sell. With a return potential of 9.5%, the stock’s consensus target price stands at $283.19.