After Cowen’s top analyst Matthew D. Ramsay met with Nvidia’s (NVDA) CEO Jensen Huang and CFO Colette Kress Friday morning, the analyst decided to lower his estimates, but maintain an Outperform rating. The price target is now $265 and was $320 before. The new price target still shows about an 80% upside from the current share price. Was it the third-quarter earnings released the night before — or something that happened at the Silicon Valley meeting with the chip giant’s executives that caused Ramsay to make downgrade the PT? It seems the analyst thinks the company needs a little bit more time to get on top of some inventory slow-downs it recently experienced.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Matthew Ramsay has a yearly average return of 22% and a 60% success rate. Ramsay has a 128.9% average return when recommending NVDA, and is ranked #58 out of 5,129 analysts.
Huang told Ramsay about a “near-term post-crypto inventory glut that will take 1 – 2 quarters to digest,” and also noted NVIDIA has not seen a material change in gamer-buying patterns or enthusiasm. Huang explained that when crypto declined, the channel took a longer time than anticipated for higher pricing to decrease. Excess inventory will need one to two quarters to work through affecting sell-in for a third of the company’s gaming business. Huang, however, believes initial feedback from customers is extremely positive for the new Turing gaming cards that were launched at the end of the quarter and that the benefits will become more wide-spread as the games utilize its Turing ray tracing features.
“We continue to believe NVIDIA’s combination of multicore parallel processing expertise and simulation software represents an irreplaceable combination in autonomous. With simulation expertise enhanced significantly by ray tracing, NVIDIA has the ability to create and accelerate autonomous testing with DriveSim, without placing in-development vehicles on the road. Mr. Huang believes autonomous driving will become an increasingly important story beginning as early as 2019, and then quickly inflect to be a material contributor to NVIDIA’s revenue shortly thereafter.”
It looks like NVIDIA has a bright future ahead and many other analysts would agree. TipRanks found out of 29 analysts, 21 are bullish and eight are sidelined. The consensus price target stands at $230.67, showing an upside of about 56%. (See NVDA’s price targets and analyst ratings on TipRanks)