On October 22, NVIDIA (NVDA) rose in the premarket trading session, and it was up 0.9% at 10:18 AM EDT. The stock surged today on news that Wells Fargo raised its 12-month target price for Nvidia stock from $200 to $220. The higher price target represents a potential investment return of 12.2% over the next 12 months from the last closing price of $196.01. Wells Fargo analyst Aaron Rakers reiterated his “outperform” rating on the stock.
The analyst raised his target price after Nvidia CEO Jensen Huang’s keynote presentation at the MWC Los Angeles event on October 21. Rakers thinks the company’s data center segment will return to growth.
The stock also rose on some positive signs in the US-China trade negotiations. According to a CNBC report on October 21, White House adviser Larry Kudlow stated that “tariffs scheduled for December could be withdrawn if trade negotiations continue to go well.” US chip stocks like Nvidia, Micron (MU), Intel (INTC), and Advanced Micro Devices (AMD) have significant revenue exposure to China.
Analysts’ recommendations for Nvidia stock
Among the 39 analysts surveyed by Thomson Reuters who follow Nvidia, 27 recommend a “buy” and nine recommend a “hold.” The remaining three analysts recommend a “sell.”
Nvidia’s overall rating score is 2.21, which is equivalent to a “buy.” The stock’s mean consensus 12-month price target of $193.70 represents a potential downside of 1.2% over its closing price on October 21. The consensus target price for Nvidia is up from $186.31 in September, a rise of 4.0%.
Nvidia’s competitors Micron, Intel, and Advanced Micro Devices have average broker target prices of $54.48, $53.13, and $33.54, respectively. These figures imply returns of 20.5%, 1.9%, and 4.7%, respectively, over the next 12 months.
Nvidia stock performance
On October 21, Nvidia stock rose 2.9% and closed at $196.01, with a market cap of $119.4 billion. The stock is trading 57.5% above its 52-week low of $124.46 on December 26, 2018. Also, Nvidia stock is trading 12.6% below its 52-week high of $224.19 per share on October 23, 2018. For the last 14 days, Nvidia’s relative strength index score stands at 65. This score suggests that the stock is approaching overbought levels.
Year-to-date, Nvidia stock has risen 46.8% through October 21. And during this period, Intel, Micron, and Advanced Micro Devices have risen 11.1%, 42.5%, and 73.5%, respectively.
In the third quarter, Nvidia is likely to report adjusted EPS of $1.58, down 14.1% year-over-year. Analysts also expect third-quarter revenue to fall 8.2% year-over-year to $2.9 billion.
Read Nvidia Brings GeForce Now Cloud Gaming to Android and Nvidia: Why Bank of America Sees Solid Growth Ahead to learn more. Also check out Why Nvidia Stock Could Keep Rising.