Why Analysts Are Chasing NVIDIA Targets Much Higher After Earnings

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NVIDIA Corp. (NASDAQ: NVDA) reported its second-quarter financial results after the markets closed on Thursday. Overall the report was very solid and appears to be signaling continued growth in its platforms. As a result, analysts poured into the stock.

24/7 Wall St. has included a few highlights from the earnings report, as well as what analysts are saying after the fact. We noticed that some analysts were even telling their clients ahead of the report that would be strong buyers of NVIDIA shares if there was any post-earnings selling pressure.

This company has been on the cutting-edge of developing deep learning and artificial intelligence (AI), which it believes has the potential to revolutionize the market and the way we do business. NVIDIA posted a handy gain on the day and a solid win on the earnings report, seemingly paving the way for this well-positioned tech company to further its platforms. Guidance would suggest so as well.

The company posted $0.40 in earnings per share on $1.43 billion in revenue, beating consensus estimates from Thomson Reuters of $0.37 in EPS on $1.35 billion in revenue. In the same period of last year, NVIDIA said it had EPS of $0.05 and revenue of $1.15 billion.

In terms of the outlook for the fiscal third quarter, the company expects revenue to be $1.68 billion, with a gross margin of 58%, plus or minus 50 basis points. Consensus estimates call for $0.43 in EPS on $1.45 billion in revenue for the current quarter.

Merrill Lynch reiterated its Buy rating and raised its price objective to $72 from $65. Its report said:

Our positive view on Nvidia is based on its underappreciated transformation from a traditional PC graphics chip vendor, into a supplier into high-end gaming, enterprise graphics, cloud, accelerated computing and automotive markets. The company has executed consistently and has a solid balance sheet with demonstrated commitment to capital returns.

Jefferies reiterated its Buy rating and raised its price target to $73 from $69. The firm detailed in its report:

Upside was broad-based, with strength in Deep Learning and ProViz, demonstrating the diversity of apps demanding NVDA’s products. NVDA remains a top pick, as we grow more confident in the secular growth vectors driving NVDA’s fundamentals. We expect NVDA to deliver more upside surprises over the next 12-to-18 months.

A few other analysts weighed in on NVIDIA as well:

  • Barclays has an Underweight rating and raised its price target to $54 from $40.
  • BMO Capital Markets raised its price target to $59 from $51.
  • Canaccord Genuity has a Buy rating and raised its price target to $70 from $67.50.
  • Deutsche Bank has a Hold rating and raised its price target from $32 to $51.
  • Goldman Sachs has a Buy rating and raised its price target to $70 from $63.
  • Jefferies has a Buy rating and raised its price target to $73 from $69.
  • JPMorgan has a Neutral rating and raised its price target from $39 to $60.
  • Mizuho Securities has a Buy rating and raised its price target to $66 from $60.
  • Morgan Stanley has an Equal Weight rating and raised its price target to $64 from $55.
  • Nomura has a Buy rating and raised its price target to $62.50 from $55.
  • Raymond James raised its price target from $55 to $75.

Shares of NVIDIA closed on Friday at $63.04, with a consensus analyst price target of $53.73 and a 52-week trading range of $20.00 to $63.38.