Nvidia Rose, Analyst Upgraded Stock before Earnings



On Monday, Nvidia (NVDA) stock rose 3.9% and closed at $210.50. At the closing price, the company’s market capitalization was $128.2 billion. The stock is trading 3.2% below its 52-week high of $217.41 and 69.1% above its 52-week low of $124.46. On a year-to-date basis, the stock has returned more than 58% as of Monday. In comparison, the S&P 500 has gained 22.8% this year.

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Why did Nvidia stock rise?

Nvidia stock gained after a Wall Street analyst upgraded the stock before its third-quarter earnings on November 14. On Monday, Craig-Hallum raised the 12-month target price on Nvidia stock to $200 from $165. The new target price implies a 0.2% downside from the stock’s closing price on Monday. Craig-Hallum analyst Richard Shannon reiterated his “hold” rating on the stock. According to reports, Shannon bets on Nvidia’s gaming business and expects impressive earnings. He thinks that the adoption of ray-tracing technology will help the company boost its demand and revenues. Nvidia partnered with Microsoft (MSFT) in August to expand its ray-tracing technology in Microsoft’s Minecraft video games.

In an investors’ note, as reported by The Fly, Shannon also discussed Nvidia’s near-term growth prospects. The Fly also stated that low-end and mid-range GPU sales and lower channel inventory would drive the company’s gaming segment. However, the Craig-Hallum analyst is concerned due to the company’s valuation.

For the third quarter, analysts expect the company to report revenues of $2.9 billion—down 8.3% YoY. Analysts expect the third-quarter earnings to be $1.57 per share—down 14.7% YoY.

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Monday’s gain also came due to trade deal optimism. The US and China are working to end the prolonged trade war. According to a CNBC report, a trade deal could come this month. Optimism about the China trade deal led to a spike in other major semiconductor stocks. Marvell Technology (MRVL) gained the most on Monday and closed 6.6% higher due to US-China trade deal hopes. Marvell stock rose due to an analyst upgrade. Broadcom (AVGO), Qualcomm (QCOM), Intel (INTC), Micron (MU), and Advanced Micro Devices (AMD) also rose on Monday. The stocks gained more than 2.8%, 1.8%, 1.9%, 2.5%, and 4%, respectively.

Analysts’ recommendations and target prices

Overall, analysts are positive on Nvidia stock. Among the 39 analysts tracking the stock, 69% recommend a “buy,” 23% recommend a “hold,” and the rest recommend a “sell.” The mean target price of $195.64 implies a 7.1% downside from the current price of $178.23 in the next year. The median target price was $195.00 on the same day.

Recently, Bank of America and RBC Capital raised their target prices on Nvidia stock. Like Craig-Hallum, Bank of America and Goldman Sachs have a bullish stance on the company’s gaming business. RBC Capital expects Nvidia’s focus on the data center segment to drive growth. Analysts at Evercore ISI and SunTrust Robinson Humphrey also upgraded the stock.

Nvidia’s stock returns

Nvidia stock has only risen 0.2% from last year due to the crypto bubble bursting. On Monday, the stock closed 7.8%, 14.8%, and 21.9% above its 20, 50, and 100-day moving averages of $195.19, $183.3, and $172.6, respectively. Nvidia’s 14-day relative strength index score of 64.7 indicates that the stock isn’t oversold or overbought.

Nvidia’s upper, middle, and lower Bollinger Bands are $212.71, $195.19, and $177.67, respectively. The stock closed near the upper Bollinger Band on Monday, which indicates that the stock is overbought.

Looking at the technical levels, we think that investors should hold Nvidia stock at the current levels. Analysts’ upgrades before the third-quarter earnings signal that the stock has upside potential. The trade deal optimism also hints that the stock could increase more.


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