Gleacher & Co. Maintains a 'Neutral' on NVIDIA (NVDA); Transformation Ongoing; Higher Spending Required Ahead

Gleacher & Co. maintains a 'Neutral' on NVIDIA (NASDAQ: NVDA).

Gleacher analyst says, "Little has changed in our thesis post-FQ1 earnings. In fact, pre-Intel (Nasdaq: INTC) royalty announcement our FY12 GAAP EPS estimate was $0.72. With the $0.29 accretion adjusted for INTC (implying $1.01), our current GAAP EPS estimate of $1.05 mostly reflects 1) impact of better than expected tax rate and share count, and 2) slightly faster ramp to 50%+ gross margins, with minimal changes to expectations of underlying segments. At current levels, we feel it is simply necessary for NVDA to begin to recognize more significant growth out of its Core GPU segment and higher-margin PSB. In our opinion, most at risk to this fair-value model is a run-away train effect to operating expenses in attempts to solidify positioning in mobile as fruition of efforts (EPS) likely do not become visible until CY13/CY14."

For more ratings news on NVIDIA click here and for the rating history of NVIDIA click here.

Shares of NVIDIA closed at $20.50 yesterday.

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