Are Analysts Overly Optimistic on Nvidia After Earnings?

Nvidia Corp. (NASDAQ: NVDA) reported fiscal fourth-quarter results after markets closed on Thursday. Overall, results were fairly positive and analysts were more than happy to cheer the stock on to new all-time highs. However, with the stock gaining over 80% in the past six months alone, it begs the question of whether analysts are overly optimistic on Nvidia.

Here, 24/7 Wall St. has included some highlights from the earnings report, as well as what a few analysts are saying after the results.

The chipmaker said that it had $1.89 in earnings per share (EPS) and $3.11 billion in revenue, which compared to consensus estimates that called for $1.67 in EPS and $2.97 billion in revenue. The same period of last year reportedly had $0.80 in EPS and $2.21 billion in revenue.

The company now expects to close its $6.9 billion acquisition of Mellanox Technologies “in the early part of calendar 2020.” At the end of last quarter, Nvidia said it will return to buying back stock after it closes the deal. Nvidia will pay its regular cash dividend of $0.16 per share on March 20 to shareholders of record on February 28.

Looking ahead to the fiscal first quarter, Nvidia expects to post revenue of $3 billion (plus or minus 2%). Adjusted gross margins are forecast at 64.5% to 65.9% and adjusted operating expenses are expected to ring in at $835 million. The company did not offer an earnings forecast, and the first-quarter estimate includes a $100 million downward adjustment to account for potential effects of the coronavirus outbreak. Analysts are looking for first-quarter EPS of $1.52 and revenues of $2.85 billion.

Here’s what analysts had to say about Nvidia after the results:

  • BMO Capital Markets reiterated a Market Perform rating with a $285 price target.
  • Morgan Stanley reiterated it as Overweight and raised its price target to $304 from $259.
  • Cowen reiterated an Outperform rating and raised its target price to $325 from $240.
  • UBS Group has reiterated a Buy rating, as well as raised its price target to $320 from $300.
  • Raymond James reiterated an Outperform rating and raised its target to $300 from $240.
  • Rosenblatt Securities reiterated it as a Buy and raised its price target from $240 to $315.
  • Citigroup reiterated an Outperform rating and raised its price target to $315 from $245.

Nvidia stock traded up about 6% at $287.53 on Friday, in a 52-week range of $132.60 to $288.46. The consensus price target is $248.35.