The firm said it lowered its rating on the company, which creates the graphic chips used in personal computers, based on its belief margins have peaked and company sales could decrease.
"We rate NVIDIA CORP (NVDA) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
Separately, TheStreet Ratings team rates NVIDIA CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
- The revenue growth came in higher than the industry average of 3.4%. Since the same quarter one year prior, revenues rose by 15.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 84.61% and other important driving factors, this stock has surged by 38.93% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NVDA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 75.3% when compared to the same quarter one year prior, rising from $77.89 million to $136.52 million.
- NVIDIA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NVIDIA CORP reported lower earnings of $0.74 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($0.89 versus $0.74).
- You can view the full analysis from the report here: NVDA Ratings Report