NEW YORK (TheStreet) -- Nvidia (NVDA - Get Report) shares were upgraded to "buy" from "hold" by analysts at Needham on Monday who set a $23 price target on the company's shares.
The upgraded outlook comes after the graphics chip maker posted a 33% rise in second quarter profits last week.
Nvidia shares are up 0.2% to $19.04 in early market trading today.
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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:
"We rate NVIDIA CORP (NVDA) a BUY. This is driven by a number of strengths, 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:
- NVDA's revenue growth has slightly outpaced the industry average of 8.9%. Since the same quarter one year prior, revenues rose by 12.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Semiconductors & Semiconductor Equipment industry average. The net income increased by 32.7% when compared to the same quarter one year prior, rising from $96.45 million to $127.98 million.
- NVIDIA CORP has improved earnings per share by 37.5% 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