Nvidia's Upbeat Outlook Is Cheering Up Its Share Price

It’s been an interesting 24 hours for investors in Nvidia (NVDA).

Yesterday, shares of the graphics chip company traded lower heading into the company’s earnings announcement last night; there were concerns about high levels of channel inventory and market share losses to the ATI division of Advanced Micro Devices (AMD).

When the company reported results, the stock initial swooned in after hours trading, dropping more than 8%, as revenue met expectations but profits came up short, as gross margins fell a full 100 basis points below Street estimates. But in the post-earnings conference call (and a subsequent interview with Tech Trader Daily) the company said that it expects July quarter results to show a gross margin rebound of 100 points as it completes a key product transition. The stock quickly recovered most of its initial losses, though it still ended yesterday’s late session with a small loss.

Today, the stock is flashing green: The sense on the Street is that the outlook is strong, and the Nvidia has done a nice job dealing with with the short-term product transition issues.

Bobby Burleson, an analyst at Canaccord Adams, today raised his rating on the stock to Buy from Sell; his price target goes to $26, from $16. His take is that the stock appears undervalued given recent improvements in the PC supply chain and “stability at NVDA manufacturing partners.” Burleson raised his EPS estimate for the July quarter to 38 cents from 35 cents; for the January ‘09 fiscal year, he goes to $1.66, from $1.56.

Comments

[User 142101]

I play alot of computer games and all the best players have nvidia cards. nvidia makes the best top-of-the-line cards today. most of the the gaming community will choose a nvidia over ati anyday

[Outrider]

In quote to User 142101, it's very true, the general consenus of the consumer class is that nVidia cards are the industry standard, and ATI are merely the low quality card.

[nukldrager]

Is nvidia a competitor to intel and amd?