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NVIDIA Corporation Message Board

  • getanid61 getanid61 Feb 12, 2013 11:19 AM Flag

    NVIDIA Target Lowered Ahead of Reporting and 4 Stock Analyses to Follow

    NVIDIA Corporation (NASDAQ:NVDA): Current Price: $12.49

    FBR Capital decided to reduce its price target on the company’s shares to $14 from $16 before the company reports its Q4 results and reiterated its Market Perform rating on the stock. According to FBR, its channel checks show that Q4 PC chip sales were challenging and the firm believes that it will see PC weakness in Q1.

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    • PC sales had a significant decline during the quarter. That widely confirmed.

      The decline was almost entirely on the low end, with tablets substituting for basic home PCs. There was comparatively little change in the sales of engineering and graphics workstations, which are segments with high GPU attach rates

      AMD reported a reduction in sales of GPUs. Spot prices indicate a trend of decreasing pricing on AMD/ATI GPUs, while Nvidia GPUs haven't dropped in price for two quarters (which is unusual). The open question is if Nvidia gained market share and margin -- it appears that they likely did.

      That said, I can understand why they lowered the price target. No one sees a rebound in traditional PC sales, and the engineering/gaming workstation market is in a stable replacement-refresh sales mode. But they are missing the significant net profit that the current GPU business is providing.

    • Any sell-side analyst (such as FBR's Craig Berger) who issued a rating or target change on the eve of earnings reporting (such as now) should be viewed as a sure-fire contrarian indicator. DOUBLY CONFIRMED.

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