Analyst Looks for NVIDIA Corporation (NVDA) Long-Term Product Portfolio to Take Center Stage on Analyst Day

RBC Capital's Mitch Steves expects a double show from NVDA on Analyst Day- between products and financials.


NVIDIA Corporation (NASDAQ:NVDA) now has its second analyst in two days offering a vote of confidence to the chip giant ahead of its Analyst Day next Tuesday.

Yesterday, FBR analyst Craig Ellis was out looking for shares to take a leap this year thanks to various growth drivers at play for the long-term and a compelling competitive upper hand at play.

Today, RBC Capital analyst Mitch Steves likewise reiterates an Outperform rating on NVDA stock with a $285 price target, which implies a 15% upside from current levels. (To watch Steves’ track record, click here)

As with past events, the analyst looks for new product launches and roadmaps to take the spotlight front and center with financial estimates staying the same. “Historically, financials have been historical in nature and we think this will remain unchanged in 2018,” the analyst predicts.

Steves continues, “Conflicting reports from Reuters and TomsHardware suggest that there may be two new GPU architectures (Ampere and Turing). While it is unclear if there will be an official product announcement, we think a time-line at minimum would make sense. Providing a new product has historically been the main draw of GTC and providing a roadmap would be a base case scenario in our view. Specifically, we are looking for a consumer card update versus a Data Center product update. In addition, from a TAM and market perspective, we think the Company will reiterate its views versus raising expectations to keep the focus on the long-term product portfolio. Net Net: we anticipate a product roadmap at minimum (potential consumer GPU) and believe financials will reflect historical performance with a reiteration of TAMs.”

By 2020, NVDA could have a $12 EPS upside case on its hands- should Data Center dial down towards 50% by then with stronger gross margins circling 80%. On bullish notes, Steves pays attention to hyperscale spending, which “continues to show up” and adds that memory demand, required for computing has proven stellar. Gaming just needs its drivers of switch revenues and core gaming demand to continue unshakable.

Lastly, Auto could be ramping up gains to a prospective of 50% “in the out years;” however yesterday’s Uber pause on autonomous vehicle tests following a fatality could cause a production timing delay.

In a nutshell, Steves looks for a “focus on products” from the NVDA team come Analyst Day as well as a “reiteration of financials.”

TipRanks underscores Wall Street likes Nvidia’s chances, but sentiment is not overwhelmingly confident, but positive all the same. Out of 22 analysts polled in the last 3 months, 12 bulls bet on this chip giant, with 9 playing it safe from the sidelines and only 1 running for the hills. With a slight return potential of nearly 3%, the stock’s consensus target price stands at $253.75.