Last week saw the newest yearly earnings release from NVIDIA Corporation (NASDAQ:NVDA), an important milestone in the company's journey to build a stronger business. NVIDIA reported US$11b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$4.52 beat expectations, being 5.1% higher than what analysts expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
After the latest results, the 36 analysts covering NVIDIA are now predicting revenues of US$13.4b in 2021. If met, this would reflect a substantial 22% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shoot up 40% to US$6.43. Before this earnings report, analysts had been forecasting revenues of US$12.7b and earnings per share (EPS) of US$5.85 in 2021. So there seems to have been a moderate uplift in analyst sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
It will come as no surprise to learn that analysts have increased their price target for NVIDIA 17% to US$302 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on NVIDIA, with the most bullish analyst valuing it at US$360 and the most bearish at US$140 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Next year brings more of the same, according to analysts, with revenue forecast to grow 22%, in line with its 20% annual growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 9.0% next year. So it's pretty clear that NVIDIA is forecast to grow substantially faster than its market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around NVIDIA's earnings potential next year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for NVIDIA going out to 2024, and you can see them free on our platform here.
We also provide an overview of the NVIDIA Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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