Goldman Sachs Sees 27% Upside in NVIDIA (NVDA) and Adds Stock to Conviction Buy List
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(Updated - December 20, 2016 9:05 AM EST)
Goldman Sachs upgraded NVIDIA (NASDAQ: NVDA) from Buy to Conviction Buy with a price target of $129 (prior $92), implying upside of 27%. 2018 and 19 EPS estimates were increased by 18% and 33% to $3.41/$5.14 from $2.88/$3.86. Analyst Toshiya Hari noted that the company was levered to secular growth.
"We continue to view NVDA as a unique growth story in semis, levered to positive secular trends in gaming, VR (virtual reality), AI (artificial intelligence)/ML (machine learning) and automotive. Note our revised FY18/19 EPS estimates are 26%/57% above the Street, respectively, and we expect estimate revisions to serve as a positive catalyst for the stock in the coming quarters," said Hari.
The analyst added, "We update our assumptions for Nvidia’s data center business given our view that 1) AI/ML capacity additions will drive TAM expansion; 2) Nvidia continues to leverage its position to gain greater share of the ML hardware TAM; and 3) competition continues to face high barriers to entry with new entrants not expected until the mid-2017/2018 timeframe. We remain confident in the growth trajectory of Nvidia’s data center business, with our revenue estimates moving up 35%/53% for FY18/19 and we now expect data center segment revenue to grow 99%/53% in FY18/19 vs 50%/34% prior. We are also taking a more positive long-term view on the overall gaming market, as we expect growth of the gaming population and product refresh to drive revenue in addition to VR. As a result, we now model overall Gaming segment revenue +20%/+28% yoy in FY18/19 vs +16%/+20% prior."
Shares of NVIDIA closed at $101.63 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change, Hot Comments, Hot Upgrades, Upgrades
Related EntitiesGoldman Sachs Conviction Buy List, Goldman Sachs
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