Why This Analyst Boosted His Price Target 28% On 'Franchise Pick' Nvidia

NVIDIA Corporation NVDA is trading up 193 percent year over year, and Jefferies expects no slowdown.

“We continue to see NVDA as a major beneficiary of the 4th Tectonic Shift in Computing, where serial processing (x86) architectures give way to massively parallel processing capabilities as the next wave of connected devices approach 10 billion units by 2022,” analyst Mark Lipacis wrote in a Monday note.

Lipacis raised his price target from $180 to $230 and estimated a five-year earnings per share of $13 (see Lipacis' track record here).

The Justification

The increase is inspired in part by Nvidia’s latest graphics processing unit, which supports the cloud and datacenter operations of the likes of Alibaba Group Holding Ltd BABA, Baidu Inc (ADR) BIDU and Tencent Holdings.

“We believe NVDA's Volta GPU with its tensor cores keeps it well ahead of competition in neural network training and will translate to upside surprises over the next 18 to 24 months,” Lipacis wrote.

Nvidia’s CUDA software language is similarly seen to lend a “multi-year competitive advantage” in deep learning and materially expand the firm’s total addressable market in artificial intelligence.

Street Consensus

Jefferies isn’t alone in its judgment. Nvidia’s expanding exposure to automotives, cryptocurrency, gaming and home assistants has prompted a number of comparable target hikes this quarter.

Mizuho Securities raised its mark from $180 to $220, Bank of America from $185 to $210, Evercore ISI from $180 to $250 and Loop Capital from $181 to $205.

Nearly everyone on the Street is bullish on the stock, which boasts 21 Buy ratings against 11 Holds and three Sells.

At the time of publication, shares were trading at $195.98.

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