Research Questions NVIDIA Turnaround Versus Valuation (NVDA, INTC)

NVIDIA Corporation (NASDAQ: NVDA) has been in the midst of a turnaround, and its latest post-earnings reaction would lead one to believe that the turnaround is well underway.  An analyst SELL rating may bring some of the gains into question. UBS has maintained its SELL rating for NVIDIA, but more importantly it has a $10.00 price target.  If that comes to pass, NVIDIA shares would be set for a drop of 26.5% from the $13.62 level seen today.  That would take it dangerously close back to the $9.00 lows seen during the summer.

An interesting note in the research is actually that a possible patent/license suit settlement from Intel Corporation (NASDAQ: INTC) could act as a near-term positive catalyst for NVIDIA.

The problem is that UBS believes a settlement is already priced into the stock at the current price.  Whether UBS is right or not, analysts believe that the upside is limited here at current prices.

Thomson Reuters has a mean price target of $13.47 and a median price target of only $14.00.  Finding investors who will buy stocks with a 3% implied upside is no easy feat, although we are the first to admit that analyst estimates and analyst price targets are mere ‘guestimates’ at best through time.

Despite a down market, NVIDIA shares are up marginally at $13.62 so far this post-Thanksgiving Monday on lighter-than-normal trading volume.  At $13.62, the 52-week range is $8.65 to $18.96.

JON C. OGG