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Is There More Upside to Nvidia’s Stock Price?

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On Tuesday, Nvidia (NASDAQ:NVDA) stock hit a new 52-week high of $297.31 before closing the day at $296.57. The stock closed 2.34% higher yesterday. The stock was also trading 123.7% above its 52-week low of $132.60 on June 3, 2019. At Tuesday’s closing price, Nvidia’s market cap was $181.5 billion. The stock has risen 88.5% in the last 12 months. So, is there more upside left in the stock price?

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Nvidia stock rose

Today, Bernstein analyst Stacy Rasgon upgraded Nvidia stock to “outperform” from “market perform.” The analyst also increased its target price on the stock from $300 to $360. The target price suggests an upside potential of about 21.4% from the stock’s last closing price.

According to a MarketWatch report, “Rasgon said that while valuation appears rich, the current rally seem built on a more stable foundation, with a clean gaming profile that is not based on cryptocurrency, improved traction for its Turing graphic processing unit architecture and a return to hyperscale builds.” The report also said, “Among additional near-term catalysts, Rasgon mentioned an upcoming analyst day and the closing of the Mellanox acquisition.”

Financial performance in Q4

Nvidia reported an adjusted EPS of $1.89 in the fourth quarter of fiscal 2020 (ended January 2020). Meanwhile, Wall Street analysts projected an adjusted EPS of $1.67. The semiconductor company reported revenues of $3.11 billion in the fourth quarter of fiscal 2020, which was higher than analysts’ consensus estimate of $2.97 billion.

Nvidia, which is widely recognized for its gaming graphics chips, is concentrating on the rapidly growing data center segment for revenues. The company’s data center segment revenues increased by 42.6% YoY to $968 million in the fourth quarter of fiscal 2020.

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Analysts’ recommendations

Following Nvidia’s impressive fourth-quarter earnings, Evercore ISI, J.P. Morgan, RBC, Jefferies, Piper Sandler, Citigroup, Wells Fargo, Susquehanna, BMO, and Deutsche Bank increased their target prices. Overall, analysts have given an average target price of $301.15, which implies a 12-month return potential of 1.5%. Among the 41 analysts that follow Nvidia, 75.6% recommend a “buy,” 19.5% recommend a “hold,” and 4.9% recommend a “sell.”

Nvidia stock’s valuation

Analysts expect Nvidia’s revenues to rise by 22.5% in fiscal 2021 ending in January 2021 to $13.4 billion compared to the 6.8% fall in the previous year. The sales will likely improve by around 15.0% in fiscal 2022 to $15.4 billion. Also, analysts expect the non-GAAP EPS to rise by about 35.6% in fiscal 2021. However, analysts expect the earnings to grow by 18.2% in fiscal 2022.

As of Tuesday, Nvidia was trading at a forward PE ratio of 37.8x and 32.0x for fiscal 2021 and fiscal 2022, respectively.

Technical analysis

Nvidia stock gained in today’s pre-market trading session. The stock rose over 3% in today’s trading session at 9:40 AM ET. Currently, Nvidia stock is trading above the overbought levels with a 14-day relative strength index score of 79.25. Based on the simple moving average levels, the stock looks strong. Nvidia stock was trading 14.6% above its 20-day moving average of $258.74. Meanwhile, the stock is trading 21.3% above its 50-day moving average of $244.58 and 33.7% above its 100-day moving average of $221.85.

Nvidia’s upper, middle, and lower Bollinger Bands are $287.38, $256.09, and $224.81, respectively. The stock closed near its upper Bollinger Band level, which suggests that it’s overbought.

Nvidia stock has risen 26.0% this year as of Tuesday. The stock outperformed its semiconductor peers including Intel (NASDAQ:INTC), Qualcomm (NASDAQ:QCOM), Micron (NASDAQ:MU), and Broadcom (NASDAQ:AVGO), which have generated 10.5%, -0.2%, 7.4%, and -1.7%, respectively, this year.

Marvell and Advanced Micro Devices have returned about -6.7% and 24.1%, respectively, this year.

To learn more about Nvidia, read NVIDIA: The Way It Is Meant To Be Played and Nvidia and Mellanox Deal Wins EU Approval.

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