Nvidia -1.7% on BofA/Merrill downgrade

"While Nvidia (NVDA) is doing well in enterprise graphics, the consumer side has peaked, with gaming growth offset by mainstream PC declines," writes BofA/Merrill's Adam Gonzalez, cutting shares to Underperform.

Gonzalez declares Nvidia to have a "stretch valuation," is worried margins may be peaking, and expects only modest sales growth going forward.

He also notes there's "considerable investor debate" on whether Nvidia's Intel royalty deal (responsible for ~30% of EPS) will be renewed beyond 2017.

Shares currently go for 15x FY15 (ends Jan. '15) EPS exc. net cash. RBC upgraded Nvidia to Outperform last month as part of a bullish call on the semi industry.

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Comments (3)
  • texasredraider
    , contributor
    Comments (68) | Send Message
    Adam Gonzalez about to have major pie on his face. Project Tango. Said nothing of auto biz. GRID. Street needs to stop focusing on PC declines, where NVDA has weathered just fine b/c they focus on the high-end gaming graphic chips...not to mention TESLA and the use of NVDAs chips to help find drilling prospects in our energy renaissance.
    19 Jun 2014, 09:47 AM Reply Like
  • torchie4269
    , contributor
    Comment (1) | Send Message
    Totally agree with everything texasredraider said. This is a clueless downgrade.
    19 Jun 2014, 11:59 AM Reply Like
  • nicasurfer
    , contributor
    Comments (124) | Send Message
    totally clueless about the downgrade but using the opportunity to add to my leap calls
    19 Jun 2014, 02:41 PM Reply Like
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