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Last Minute Thought: Buy or Sell NVIDIA (NVDA) Stock Before Fiscal Q1’20 Earnings?


NVIDIA (NVDA) earnings are coming up in just a few minutes — and lots of investors will be watching. The earnings release will give investors a better idea if the company has finally reached a bottom for crypto related inventories and in data center inventories. On the other hand, the company is expected to show decent trends in Turing GPU gaming and stable automotive.

Ahead of the print, let’s take a look at what analysts expect for NVIDIA’s Q1:

BMO analyst Ambrish Srivastava opined:

With respect to earnings, we are slightly lower than consensus on our EPS estimates for both F1Q and F2Q. We are below consensus for FY2020 as well. While we do see the channel for graphics cards continuing to work down inventory near term, as highlighted in our recent PC note, we believe the 2H bar, as is the case for several companies in our coverage that have provided 2019 guidance, is very high, particularly for NVIDIA’s Gaming business. For FY1Q20, we expect revenues of $2.20 billion, roughly flat q-q and GAAP EPS of $0.56, vs. consensus’ estimates of $2.20 billion, roughly flat q-q and EPS of $0.62. For FY2Q20, we expect revenues of $2.53 billion, up 15% q-q and EPS of $0.92, vs. consensus’ $2.54 billion, up 16% q-q and $0.96.

Rosenblatt analyst Hans Mosesmann noted:

We see the consensus July quarter of up 16% q/q a bit aggressive and we are more comfortable with a low-teens q/q sales growth level given data center trends likely require another quarter or so to play itself out. With the shares down ~11% in the last month we sense the street is bracing for an outlook miss but we view the dynamic as modest.

While posture is no longer pound-the-table in nature, we view the long-term opportunity in the higher end of all things AI as attractive. Our price target for NVDA remains $190 and would be buyers on near-term weakness.

Oppenheimer analyst Rick Schafer stated:

We see sales/EPS of $2.2B/$0.81, in line with consensus but modest negative bias to Street’s F2Q (July) $2.6B/$1.15. We expect DC to remain sluggish near term as hyperscalers digest capacity, reflecting recent peer commentary. Most expect DC spending to pick up in 2H, consistent with our 1Q Asia channel checks. Our late-March checks also revealed GPU channel inventory back to normal 2.5-week level, setting the stage for F2Q growth in NVDA’s core gaming segment. We like the strategic/accretive MLNX acquisition. NVDA offers secular growth/GM expansion, a rarity in large-cap semi names.

Crypto excess appears flushed, setting the stage for 2Q gaming growth. MLNX bolsters NVDA’s established DC AI position. Structural growth drivers in high-performance gaming, autonomous vehicles and DC AI accelerators remain intact. We remain long-term buyers.

All in all, TipRanks’ data shows an overwhelmingly bullish camp backing this chip titan. NVDA stock has amassed 17 ‘buy’ ratings in the last three months vs. 8 ‘hold’ and 2 ‘sell’ ratings. The 12-month average price target stands at $188.16, marking nearly 18% in return potential for the stock. (See NVDA’s price targets and analyst ratings on TipRanks)

Read more: All Eyes on Nvidia (NVDA) Stock Ahead of Fiscal Q1 Earnings

 

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