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NVIDIA: Why Analysts Think It’s Undervalued

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NVIDIA (NVDA) stock was up 3.25% at $187.89 in the October 7 trading session as of 9:56 AM ET. Earlier today, RBC Capital raised its 12-month target price on NVIDIA stock from $190 to $217. NVIDIA closed trading at $181.97 on October 4 and had a market value of $110.82 billion. RBC’s target indicates a 19.3% rise in its current price.

RBC Capital analyst Mitch Steves has maintained his “outperform” rating on NVIDIA stock. The analyst increased his target price on the stock due to improving demand in the company’s Gaming and Data Center segments. According to TheStreet, “Positive channel checks suggest positive trends in the company’s gaming-related semiconductor chips. Nvidia’s Data Center is expected to recover in the fourth quarter thanks to a product refresh announcement that is expected to come during the period. This development further supports RBC’s forecast of expanding gross margins for Nvidia.”

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Evercore ISI analyst is optimistic about NVIDIA stock

Evercore ISI analyst C. J. Muse has a similar thesis on NVIDIA. The analyst reiterated his “outperform” rating on NVDA this morning. He has a target price of $225 on the stock, which implies a potential upside of about 23.6%. As reported by The Fly, the analyst “sees at least a 15% compound annual growth rate for Gaming into 2022, led by Notebook Gaming growth, even without giving credit for any contributions from Cloud gaming via wins at CSPs and GeForce Alliance, which could be a source of added upside.”

Analysts’ ratings and target price

Of the 39 analysts covering NVIDIA stock, 27 suggest “buys,” and nine suggest “holds” compared to 27 and 11, respectively, last month. Three analysts suggest “sells,” up from two in the last month. Their 12-month target price of $191.43 for NVDA implies a 5.2% upside based on its October 4 price. Their median target price is $190.00.

Stock performance

NVIDIA stock rose 0.36% on October 4 and closed at $181.97, 32.9% below its 52-week high of $271.16 and 46.21% above its 52-week low of $124.46. Up 36.31% year-to-date, NVDA has largely underperformed its semiconductor peers. This year, Advanced Micro Devices (AMD) and Micron (MU) have returned 57.2% and 40.4%, respectively.

NVIDIA’s 14-day MACD (moving average convergence divergence) is 6.29, which indicates an upward trading trend. A stock’s MACD marks the difference between its long-term and short-term moving averages.

Read NVIDIA Stock: A Price Target and Valuation Update and How AMD’s and NVIDIA’s Price Momentum Compares to learn more. Also check out NVIDIA Unveils the World’s Fastest Mobile Workstation.

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