|Nvidia: Targets, Estimates Rising on ‘Smashing’ FYQ2, Outlook |
By Tiernan RayShares of Nvidia ( NVDA) are up 6 cents at $14.77 after the company last night beat fiscal Q2 estimates and offered a revenue view for this quarter comfortably ahead of consensus, helped by what appear to be share gains in graphics processing unit (GPU) chips versus competitor Advanced Micro Devices ( AMD), and by ramping sales of its “Tegra” processor for smartphones and tablets.
During a phone call following the company’s results, CEO Jen-Hsun Huang told me of his love for his recently acquired “Nexus 7? tablet from Google ( GOOG) (running on Tegra), which is expanding the tablet market, he insists, by making the category of a 7-inch tablet (as opposed to Apple‘s ( AAPL) iPad’s 10-inch screen) a viable category after many fits and starts for Android-based devices. (Samsung Electronics ( 005930KS) is holding an even next Wednesday at which some speculate it may introduce new tablets.)
This morning, price targets and estimates are going higher, as the Street extolls the quarter with language such as “smashing.” Reservations from the bears are either of the sort that last night’s victory is priced into the stock already, or that Nvidia must step up its game in smartphone chips or be struggle against Qualcomm ( QCOM). Nvidia is awaiting the arrival of its first Tegra processor with an integrated baseband, a necessary step to allow it to compete more fully for markets where smartphone prices are rapidly coming down. (Integrated products can save on the cost of combining discrete apps processor and baseband wireless chip.)
Hans Mosesmann, Raymond James: Reiterates a Strong Buy rating and raises his price target to $24 from $20, calling it “an old fashioned beat and raise quarter driven by remarkable momentum in the new 28nm-based Kepler GPU and an apparent inflection point in the Tegra3 cycle for Android and WinRT platforms […] With a number of ramps over the next few quarters including 1) Ivy Bridge (shares gains); 2) MacBook Pro launch; and 3) Windows RT where Nvidia will be on three platforms including flagship Surface device, we believe we will see a positive sentiment shift over the next few quarters as confidence in forward estimates should improve.” Mosesmann raised his 2013 estimate to $4.42 billion from $4.09 billion and raised his EPS estimate to 91 cents from 71 cents.
Craig Berger, FBR Capital: Reiterates an Outperform rating and raises his price target to $20 from $17. “Stepping back, bears say NVIDIA faces long-term GPU attach risks as Intel and AMD pursue integrated architectures, and that its wireless traction will be lackluster. Bulls say NVIDIA can be a major PC processor supplier if WoA ramps and with handset/tablet and enterprise opportunities too. We remain constructive on NVDA given its 2H12 Tegra tablet momentum, that it has $5 per share of cash with attractive valuations, that it remains highly profitable, and it is forward investing meaningfully in various growth initiatives.” Berger raised his 2012 estimates to $4.42 billion and $1 per share from a prior $3.98 billion and 65 cents.
Daniel Berenbaum, MKM Partners: Reiterates a Neutral rating and a $14 “fair value estimate.” “we could see growing more thematically constructive on the emerging potential for NVDA to benefit from some of the same cloud computing trends that have boosted INTC over the past several years – to wit, graphics processing power is moving to the cloud, NVDA has the leading architecture, and AMD is rapidly fading. That said, PC demand for GPU seems flattish, Quadro/Tesla have never fulfilled their promise, and mobility will likely continue to require large investments (and NVDA remains at a disadvantage in terms of critical mass).” Berenbaum raised his 2013 outlook to $4.4 billion in revenue and 97 cents EPS from a prior $4.2 billion and 84 cents.
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