Wall Street Reacts To Nvidia's Blowout Q4 Quarter

NVIDIA Corporation NVDA reported a blowout fourth quarter earnings report Thursday, but was it good enough to turn Wall Street's skeptics to bulls? Here's a look at how some Wall Street analysts reacted.

Oppenheimer: NVDA Surpassed High Expectations

Oppenheimer's Rick Schafer maintains a Perform rating on Nvidia's stock with no assigned price target.

Nvidia came into its Q4 earnings report with a "high bar," and the company cleared it, Schafer said in a note. Sales of $2.91 billion and an EPS figure of $1.69 both came in "easily ahead" of the Street's projection of $2.68 billion and $1.16 per share, the analyst said. Revenue from the data center, gaming, pro-visualization and OEM segments each came in at least 5 percent ahead of the consensus.

It was the seventh consecutive quarter where Nvidia more than doubled data center revenue, reaffirming the "significant market size and opportunity" the company has in artificial intelligence given its virtual monopoly in data center accelerators., Schafer said. The company's V100 product boasts clients from some of the largest international companies, and continued adoption will drive average selling price and margin growth, he said. 

Despite Nvidia's impressive 41-percent revenue growth rate in the quarter, the stock is trading at a multiple north of 30x the analyst's 2019 estimates, which implies a "balanced" risk-reward profile, the analyst said. 

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FBR: Lower Multiple, Higher Price Target

FBR's Craig Ellis maintains a Buy rating on Nvidia's stock with a price target raised from $270 to $290.

Nvidia's Q4 report solidifies the thesis that the company's positives continue to outweigh the negatives, and the company can still report upside even when the Street moves estimates higher, Ellis said in a note. 

The gaming channel inventory was "unusually lean" in a seasonally soft period, and even diligent supply efforts won't be enough to catch demand before a product refresh in March, the analyst said. In fact, a fifth consecutive year of 35-percent gaming growth is possible, he said. 

The data center segment doubled for the eighth consecutive quarter, and while auto — down 8 percent quarter-over-quarter — "undershot" versus expectations, the company's robust long-term growth profile is full of significant partnerships, Ellis said. 

The analyst's prior $270 price target was based on a 13.5x fiscal 2020 P/sales multiple, but recent market volatility calls for a reduction in the multiple to 12.5x, Ellis said. At the same time, the company's earnings report prompted a revision in sales estimates in fiscal 2020 from $12.392 billion to $14.449 billion, which boosts B Riley FBR's price target to $290.

Elsewhere On The Street

Tigress Financial's Ivan Feinseth said in his daily newsletter that he continues to recommend buying the stock and sees a near-term target of $250 per share.

Citi's Atif Malik saidNvidia continues to be a beneficiary of multiple secular growth themes, including eSports, artificial intelligence and autonomous driving.

KeyBanc Capital Markets' Michael McConnell said that a fair value estimate for Nvidia's stock is 25x on 2020 EPS of $8.25, or $206 per share.

Venture capitalist Gene Munster said Nvidia's report is "further evidence of the magnitude of the opportunity ahead.

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Photo courtesy of Nvidia.