NVIDIA (NVDA) stock fell about 1.26% on September 13. The stock closed the last trading day at $181.94. The stock’s trailing five-day, one-month, and 12-month price movements were 1.8%, 16.6%, and -33.0%, respectively. NVIDIA stock is trading 37.85% below the 52-week high of $292.76 it saw on October 2, 2018. Meanwhile, the stock is trading 46.18% above the 52-week low of $124.46 it saw on December 26, 2018.
NVIDIA stock has returned around 36.3% YTD (year-to-date). Notably, the stock has outperformed the broader markets this year. The NASDAQ Composite Index has risen 10.6% YTD. However, NVIDIA shares are falling today.
NVIDIA stock fell due to analyst downgrade
NVIDIA stock has fallen more than 1% as of 10:21 AM ET. The stock fell after an analyst slashed his rating on the stock. On September 13, DZ Bank’s Ingo Wermann downgraded NVIDIA to a “sell” from a “hold” rating. Wermann also set a target price of $158 on the stock. The new target price reflects a potential downside of 13.2% from the company’s closing price of $181.94 on September 13. At the closing price of $181.94, NVIDIA’s market capitalization is $110.8 billion.
NVIDIA’s higher revenues and earnings drove its market capitalization growth. The company’s revenues rose from $6.9 billion in fiscal 2017 to $11.7 billion in fiscal 2019—year ended in January. NVIDIA’s adjusted EPS has risen at a compound annual growth rate of 52.83% in the last five years.
Forward PE ratio
NVIDIA has a forward PE ratio of 33.75x for fiscal 2020. For fiscal 2021, the ratio is 25.68x. The company’s adjusted EPS will likely fall 18.8% in fiscal 2020 and rise 31.4% in fiscal 2021. The stock looks expensive considering its expected negative earnings growth for fiscal 2020. However, the stock appears cheap based on its expected earnings growth of 31.4% and its PE ratio of 25.68x for fiscal 2021.
NVIDIA’s financial results
NVIDIA reported an adjusted EPS of $1.24 in the second quarter of fiscal 2020—a fall of 36.1% on a YoY (year-over-year) basis. During the same quarter last year, the company reported an adjusted EPS of $1.94. NVIDIA’s second-quarter fiscal 2020 adjusted EPS beat analysts’ estimate of $1.15.
NVIDIA reported total revenues of $2.58 billion in the second quarter of fiscal 2020, which implies a 17.4% YoY reduction. In the second quarter of fiscal 2019, the company reported revenues of $3.12 billion. NVIDIA’s total revenues beat analysts’ estimate of $2.55 billion in the second quarter of fiscal 2020. The company reported a consolidated adjusted EBITDA of $894 million—a YoY fall of 33.7%.
Revenue and earnings expansion
NVIDIA’s sales rose YoY from $9.7 billion in fiscal 2018 to $11.7 billion in fiscal 2019. Analysts expect its sales to decrease 8.0% YoY to $10.8 billion in fiscal 2020 and to increase 19.8% YoY to $12.9 billion in fiscal 2021.
The company’s adjusted EPS grew YoY from $4.65 in fiscal 2018 to $6.64 in fiscal 2019. Analysts expect NVIDIA’s adjusted EPS to fall 18.8% YoY to $5.39 in fiscal 2020 and to rise 31.4% YoY to $7.08 in fiscal 2021. They expect the adjusted EPS to grow 12.5% compounded annually over the next five years.
Among the 39 analysts tracking NVIDIA stock, 26 recommend a “buy,” ten recommend a “hold,” and three recommend a “sell” on the stock. Analysts’ average 12-month target price for NVIDIA is $186.31, which indicates that the stock has a potential upside of 2.4% from its last closing price. The stock’s median target price is $190.00.
NVIDIA stock’s technical level
Based on the closing price on September 13, NVIDIA stock was trading 6.0% above its 20-day moving average of $171.59. The stock was trading 9.1% above its 50-day moving average of $166.77. NVIDIA was trading 11.9% above its 100-day moving average of $162.58. On the downside, the company’s immediate key support lies near $180.39, while $183.29 could act as an immediate key resistance level on a daily basis.
In the trading session on September 13, NVIDIA stock closed near its upper Bollinger Band level of $188.00. The value shows that the stock is overbought. Investors could take the value as a “sell” signal.
With a 14-day relative strength index number of 62.58, NVIDIA stock is approaching the overbought territory. NVIDIA’s 14-day MACD (moving average convergence divergence) is 10.05. A positive MACD level suggests an upward trading trend.