NVIDIA (NVDA) Deal for Mellanox (MLNX) a Long-Term Positive - RBC

RBC Capital analyst Mitch Steves weighed in on NVIDIA (NASDAQ: NVDA) following the acquisition of Mellanox for $125/share. Steves sees the deal as accretive to gross margins, non- GAAP EPS, and free cash flow.

"The transaction opens up a new TAM that is complementary to the core product offering and is immediately accretive across all metrics (gross margins, FCF and EPS)," Steves comments.

Net/net the analyst views the transaction as a modest long-term positive with mid-single- digit accretion. In addition, they think this opens up the discussion for more M&A in the future after valuations have taken a step back (semi-cycle).

The firm reiterated an Outperform rating and $180 price target on NVDA.

For an analyst ratings summary and ratings history on NVIDIA click here. For more ratings news on NVIDIA click here.

Shares of NVIDIA closed at $150.64 yesterday.

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