Color on Canaccord's Upgrade of NVIDIA (NVDA) to Buy
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Canaccord Adams upgrades NVIDIA (Nasdaq: NVDA) all the way from Sell to Buy and raises its price target from $16 to $26.
The firm said that as it is seeing improvements in the PC supply chain market, it believes this was likely the last estimate cut on NVIDIA. In addition, Canaccord said shares of NVIDIA look undervalued due to recent stability at the company's manufacturing partners.
Following management's Q1 and CY08 guidance that came in below Canaccord and the Street's estimates, the firm lowered its Q2 and CY08 estimates: revs for Q2 go from $1.14 billion to $1.10 billion, versus the Street estimate of $1.12 billion, while revs for CY08 go from $4.845 billion to $4.703 billion, versus $4.76 billion. Canaccord lowered its EPS estimates from $0.38 to $0.35 for Q2 and from $1.66 to $1.56 for CY08. The Street's EPS estimates are currently $0.37 for Q2 and $1.66 for CY08.
Canaccord notes that its $26 price target on NVIDIA is based on 16.6x its CY08 EPS estimate, which represents a slight discount to an 18x multiple for the firm's coverage universe.
NVIDIA Corporation provides visual computing technologies designed to generate interactive graphics on consumer and professional computing devices in the United States and internationally. [BCS]
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