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NVIDIA Stock Looks a Little Pricey Heading Into Earnings, Says Analyst

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TipRanks
·2 min read
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Game time is almost here for NVIDIA (NVDA), which is set to report its fourth-quarter results for fiscal 2021 after the closing bell on Tuesday, February 23.

NVIDIA's previous results gave investors good reason for optimism. Revenue spiked 57% year-over-year, thanks to a standout performance from the data center segment, which soared 162%.

Heading into the print, Deutsche Bank's Ross Seymore expects a “solid” quarter and guide. The 5-star analyst anticipates F4Q earnings of $2.87 per share on sales of $4.9 billion, while consensus estimate is calling for $2.81 and $4.82 billion, respectively.

As ever with Nvidia, key segments to keep an eye on are Data Center and Gaming.

“Within the former,” Seymore says, “Key questions will be on sequential Computing strength vs. Networking weakness. Within Gaming we will look to gauge how much seasonality can be offset by catching up on supply, as well as judging the duration of both the ‘catchup’ period.”

Looking ahead to F1Q22, Seymore thinks Nvidia will guide for a 46% year-over-year top-line uptick, which will result in revenue of $4.5 billion, more or less what the Street is expecting.

However, the figure represents an 8% quarter-over-quarter drop, which the the analyst attributes to the “return to a normal 13-week quarter, as well as a combination of seasonality (better than normal) and shortages (worse than normal).”

With plenty of secular tailwinds - AI, cloud, gaming and AV/ADAS - pushing it forward and “likely to persist for the foreseeable future,” the analyst counts Nvidia as “one of the absolute premier growth stories in the semi sector.”

Yet, with NVIDIA's shares up 110% over the past 12 months, much of the “goodness” is already baked into the share price, according Seymore. The analyst also believes that “an inevitable slowing in growth, appears to be insufficiently discounted.”

Therefore, Seymore remains on the sidelines with a Hold rating, although as compensation, he lifted the price target from $515 to $550. Nonetheless, the new figure implies possible downside of 4% from current levels. (To watch Seymore’s track record, click here)

According to the rest of the Street, there’s room for ~10% uptick, given the $629.79 average price target. Of the 14 reviews on record, most are Buyers – 12, in fact – and with 2 additional Holds, the stock has a Strong Buy consensus rating. (See NVDA stock analysis on TipRanks)

To find good ideas for tech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.