Are Analysts Overly Optimistic on Nvidia After Earnings?

By Chris Lange Published Feb 14, 9:55AM EST

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Are Analysts Overly Optimistic on Nvidia After Earnings? — © wellesenterprises / iStock

Nvidia Corp. (NASDAQ: NVDA) reported fiscal fourth-quarter results after markets closed on Thursday. Overall, results were fairly positive and analysts were more than happy to cheer the stock on to new all-time highs. However, with the stock gaining over 80% in the past six months alone, it begs the question of whether analysts are overly optimistic on Nvidia.

Here, 24/7 Wall St. has included some highlights from the earnings report, as well as what a few analysts are saying after the results.

The chipmaker said that it had $1.89 in earnings per share (EPS) and $3.11 billion in revenue, which compared to consensus estimates that called for $1.67 in EPS and $2.97 billion in revenue. The same period of last year reportedly had $0.80 in EPS and $2.21 billion in revenue.

The company now expects to close its $6.9 billion acquisition of Mellanox Technologies “in the early part of calendar 2020.” At the end of last quarter, Nvidia said it will return to buying back stock after it closes the deal. Nvidia will pay its regular cash dividend of $0.16 per share on March 20 to shareholders of record on February 28.

Looking ahead to the fiscal first quarter, Nvidia expects to post revenue of $3 billion (plus or minus 2%). Adjusted gross margins are forecast at 64.5% to 65.9% and adjusted operating expenses are expected to ring in at $835 million. The company did not offer an earnings forecast, and the first-quarter estimate includes a $100 million downward adjustment to account for potential effects of the coronavirus outbreak. Analysts are looking for first-quarter EPS of $1.52 and revenues of $2.85 billion.

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Here’s what analysts had to say about Nvidia after the results:

BMO Capital Markets reiterated a Market Perform rating with a $285 price target.
Morgan Stanley reiterated it as Overweight and raised its price target to $304 from $259.
Cowen reiterated an Outperform rating and raised its target price to $325 from $240.
UBS Group has reiterated a Buy rating, as well as raised its price target to $320 from $300.
Raymond James reiterated an Outperform rating and raised its target to $300 from $240.
Rosenblatt Securities reiterated it as a Buy and raised its price target from $240 to $315.
Citigroup reiterated an Outperform rating and raised its price target to $315 from $245.

Nvidia stock traded up about 6% at $287.53 on Friday, in a 52-week range of $132.60 to $288.46. The consensus price target is $248.35.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.