Shares of Nvidia Corp. (NVDA) slipped 3.44% to $128.52 Thursday morning after RBC Capital lowered its price target on the graphics chip maker's stock to $200 per share from $230.
Analyst Mitch Steves said in a note to investors that average selling prices have been coming down in secondary markets. RBC still rates the stock "outperform."
Steves wrote that ASPs have decreased over the past month, which he thinks is due to additional secondary market sales. Focusing on Nvidia's GTX gaming graphics processing unit, Steves said "as this is a gaming chip, Nvidia is unlikely able to discern if sales are for pure gaming purposes or crypto currency mining."
"When we look at the price trends, we notice a slight downward move that aligns with our belief that sales could be a bit more muted in the month of December," Steves said. "While this is likely a near-term issue and doesn't impact the long-term story, we think it is prudent to remain conservative for next quarter."
Steves said Nvidia recently ramped up its efforts within the automotive segment.
"Beyond the addition of sensors and connected devices," Steves said, "we note that display technology should also increase in the future, which creates the need for more computing power. This can include upgraded navigation systems, back-seat passenger displays, and surround-view technology."
Last month, Nvidia reported third-quarter adjusted earnings of $1.84 per share, below analyst expectations of $1.93, on revenue of $3.18 billion, compared with expectations of $3.24 billion. Guidance was weaker-than-expected, with Nvidia forecasting revenue for its 2019 fourth-quarter ending in January to be from $2.65 billion to $2.75 billion, well below Wall Street's estimate of $3.4 billion.