UPDATE: Daiwa Securities Downgrades NVIDIA (NVDA) to Neutral

(Updated - September 2, 2022 4:42 AM EDT)

Daiwa Securities analyst Louis Miscioscia downgraded NVIDIA (NASDAQ: NVDA) from Buy (1) to Neutral with a price target of $133.00 (from $215.00).

The analyst comments "We question why NVIDIA did not have a better understanding of the channel inventory level. Being that back in 11/2018 the company had a similar issue, weak crypto and excessive inventory in the channel. We would assume that a company with the resources of NVIDIA would be able to monitor this situation better, and not lead to massive resets. Valuation. Alternatively, besides unexpected very weak results, lower growth potential, China restrictions, our next issue is high valuation, especially in this environment. If one assumes that a PE should match somewhat a growth rate, with top and bottom line growth being reduced materially over the next twelve months, and then uncertainty of the go forward normalized growth numbers, a PE of 42x FY23 is just too high. We use our new FY25/CY24 EPS estimate of $5.10 and a 26x PE, to set a new TP of $133, down from $215. Revenue was $6.70b and 45.9% GMs (all Non-GAAP), or a $1.4b rev miss. EPS of $0.51 was below street $1.26. Guidance for 3Q23, before the USG notice, was 65% GM, revenue of $5.9b and $1.82b op ex. We move FY23/FY24 rev and EPS to $26.4b/$29.1b and $3.30/$4.15, from $34.0b/$39.1b and $5.50/$6.27. We start FY25 at $33.9b and $5.10."

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 $139.37 yesterday.

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