Deutsche Bank Lowers Their Price Target on NVIDIA (NVDA) to $10.50

July 3, 2008 8:08 AM EDT

Deutsche Bank lowers their price target on NVIDIA (NASDAQ: NVDA) from $22.50 to $10.50 and reiterates their Hold rating. The firm believes that until the company recaptures product leadership in GPUs, it is difficult to expect stock upside.

In relation to lower gross margins, the company's product recall, and a lower guidance, the firm said, "The company attributed the weakness to end-market weakness, delays in its notebook MCP product for the Montevina platform, and price adjustments due to pricing pressures from AMD's new R770 product line. NVDA also announced a $150-200M charge for a product recall for its GPU and MCP products. The company noted that it had seen significant weakness in the first 2 months of the quarter, despite July typically accounting for 60% of its FQ2 revenues. It also noted that AMD's (NYSE: AMD) new R770 product is very competitive in terms of performance, and thus NVDA had to re-price its current products in the market."

The firm lowers their FQ2:09 estimate from $0.34 to -$0.17 due to lower margin estimate and the product recall. In addition, the firm lowers their C08 estimate from $1.50 to $0.43 and C09 from $1.70 to $0.55 due to lower margins and growth rates.

NVIDIA Corporation offers programmable graphics processor technologies worldwide.

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