NVIDIA pares losses premarket as crypto was culprit for weak guidance; analysts upbeat on Turing product cycle: Color on Quarter (257.44)
- Oppenheimer upgrades to Outperform with $310 tgt. They see significant pent-up demand for Turing and believe estimates have reset for upside as volumes ramp. Shares could see near-term weakness following softer guidance, particularly after a strong run the past 2-3 years. With three solid, structural growth drivers in DC AI, gaming and autonomous, they see continued outsized growth.
- Cowen lowers their NVDA tgt to $320 from $325. The transitional quarter they expected appears a bit sharper than feared, with a zero-ing of crypto and gaming channel management impacting guidance as tables are set for the Turing gaming launch. Their run-rate earnings power and thesis are 100% unchanged. With expectations reset, they see a very favorable set up and would be buyers. Maintain top pick, PT to $320 as estimates go slightly lower NT.
- Stifel raises tgt to $250 from $243 after Nvidia turned in a slight beat to July quarter estimates but weaker than expected demand for GPUs used for crypto-currency mining led to a miss versus October ending quarter estimates. Given this current semiconductor ‘peak cycle' environment, the market will not accept a miss to estimates for any reason. Meanwhile, they are impressed with Nvidia's new Turing GPU architecture and real-time ray tracing feature.
- Needham notes NVDA guided Oct. sales ~2% below the Street primarily due to a steep decline in cryptocurrency. Every other segment was up sequentially and year-over-year and hit record levels. In other words, 96% of the revenue grew on average 52% Y/Y in July qrt and they forecast will grow 23% Y/Y in Oct. qrt. They believe crypto is a side show for NVDA and the bigger picture is the underlying trend towards AI / machine learning whereby GPU-based parallel computing is technologically superior than existing processors. They believe the new Turing architecture is a transformational shift in addressing the visual market.
- B. Riley FBR notes NVDA's F2Q19 print surprised higher and while F3Q19's sales guide was $75M lower, quality was higher than it appeared as both quarters absorbed an $80M+ crypto undershoot to their forecast. Indeed, in F2Q all four Platform groups exceeded our forecasts, while their F3Q19 and F4Q19 Platform Group modeling is largely retained. Shares were off AMC, tracking to fears of a sell-the-news reaction following healthy +32% YTD gains, though in their view current entry opportunities remain very attractive. New sub-seasonal F3Q&4Q modeling looks conservative into a transformative product release within multiple Platform Groups. Their estimates fine tune, with F19-21 EPS easing $0.04, $0.15 and $0.10 to $8.06, $8.95 and $11.25, respectively but they retain a $300 price target and Buy rating on the catalyst rich shares they believe are compelling for growth investors.
- Jefferies and Wells Fargo defended the stock
- JPMorgan tgt to $265 from $255; Neutral
- NVDA -2.2% premarket; AMD -0.5%
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