In a report released today, Rajvindra Gill from Needham maintained a Sell rating on Nvidia (NVDA). The company’s shares closed yesterday at $161.14.
Gill wrote:
“Yesterday, NVDA announced an all-cash offer of $125/ share to acquire MLNX. The price equates to an enterprise value of $6.9BN or ~6.3x 2018 sales. The deal accounts for over 90% of NVDA’s $7.4BN of cash and short-term investments. The stock reacted positively on the news, up 7% on the day, which we found surprising given the unusual size of the transaction (NVDA has not made an acquisition of this magnitude in recent history) and the timing (following a negative pre-announcement). Nonetheless, we expect the deal will be immediately accretive to the financials assuming no synergies (revenue or cost) and see it helping to expand the company into the Infiniband and Ethernet markets. We do wonder though about the strategic synergies of the deal as the two companies sell vastly different products into the data center.”
According to TipRanks.com, Gill is a 5-star analyst with an average return of 12.1% and a 57.4% success rate. Gill covers the Consumer Goods sector, focusing on stocks such as Sequans Communications S A, Everspin Technologies Inc, and Smart Global Holdings Inc.
The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Nvidia with a $184.88 average price target.
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Based on Nvidia’s latest earnings release for the quarter ending January 31, the company reported a quarterly revenue of $2.21 billion and net profit of $567 million. In comparison, last year the company earned revenue of $2.91 billion and had a net profit of $1.12 billion.
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NVIDIA Corp. engages in the design and manufacture of computer graphics processors, chipsets, and related multimedia software. It operates through the Graphics Processing Unit (GPU) and Tegra Processor segments.
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