Nvidia Price Target Raised to Wall Street High by Susquehanna

Susquehanna sees Nvidia's Mellanox acquisition boosting market capitalization.
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Nvidia's  (NVDA) - Get Report price target was raised to a Wall Street high Thursday by a Susquehanna analyst who said the chipmaker's acquisition of Mellanox could add up to $30 billion to the company's market capitalization.

Shares of the Santa Clara, Calif.-based company were up 1.4% to $374.51.

Analyst Christopher Rolland raised his price target to $450 from $420, the highest listed on FactSet, telling clients in a note that he sees the "Mellanox asset growing at a double-digit rate over the next three to five years and growing market share under new management."

"We ultimately think the Mellanox assets could add $20 to $30 billion to Nvidia’s market cap and perhaps more," said Rolland, who reiterated his positive rating on the company.

Nvidia said it planned to buy Mellanox for $6.9 billion in March 2019, but a lengthy regulatory review delayed the deal's closure until recently.

Rolland said he hosted a call with Nvidia Chief Financial Officer Colette Kress and Kevin Deierling, senior vice president of marketing for Mellanox's networking business unit.

"Importantly, Nvidia believes Mellanox will provide them with more fully comprehensive system solutions enabling them to further penetrate new endmarkets and applications such as edge computing, smart cities, telecom, and even automotive," the analyst said. "Of these opportunities, we view low-latency automotive ethernet to be of particular interest as we think it could be an important part of the real-time AV processing puzzle."

Industry experts said that automotive ethernet will make it possible to achieve in-vehicle high data speeds. 

Rolland said that Nvidia "had an eventful week indeed." On Tuesday, Nvidia and Daimler's  (DMLRY)  Mercedes-Benz announced that that Nvidia’s Drive hardware/software platform will underpin a “new software-defined architecture” that will be standard for Mercedes’ next-gen vehicle fleet.