Wells Fargo Keeps NVIDIA (NVDA) At Underperform But Raises PT 79%
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Wells Fargo analyst David Wong stuck to his guns and kept his Underperform rating on shares of NVIDIA (NASDAQ: NVDA) after the company reported revenues for the quarter of $2.004B on (up 40% sequentially, up 54% year over year), significantly above Nvidia’s original guidance range of $1.68 billion +/- 2%. Reported GAAP gross margin in the quarter increased to 59.0% from 57.8% in the prior quarter, above the midpoint Nvidia’s GAAP guidance for gross margin to be 57.8% +/- 50bps. GAAP EPS for the quarter of $0.83 was significantly above the consensus est of $0.56 and our $0.54 GAAP EPS est.
Discussing the segments, gaming and datacenter showed impressive growth and automotive contributed in the October quarter. The analyst's FY17 EPS estimate increases to $2.37 from
$1.77 and the analyst is raising his valuation range substantially, to $54-64 from $30-36, based on
~20-24x FY18 EPS of $2.67. That said, the stock price is above the new valuation range and the Underperform rating stays.
Shares of NVIDIA closed at $67.77 yesterday.
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