NEW YORK (TheStreet) -- Shares of NVIDIA Corp. (NVDA) are rising, up 1.07% to $19.75, in pre-market trading Monday after the semiconductor company was upgraded to "sector perform" from "underperform" by analysts at Pacific Crest this morning.
Analysts at the firm cited the graphics chip maker's market share gains in the high-end graphics chip industry.
Pacific Crest analysts also cited the product delays of its competitor Advanced Micro Devices, Inc (AMD) for the raise in rating.
The Santa Clara, CA-based company makes graphics chips that are used in personal computers, as well as mobile processors which are used in cell phones, tablets and auto infotainment systems.
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:
"We rate NVIDIA CORP (NVDA) a BUY. This is driven by several positive factors, 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 increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and solid stock price performance. 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:
- 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.
- Despite its growing revenue, the company underperformed as compared with the industry average of 18.9%. 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.
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 5.59, which clearly demonstrates the ability to cover short-term cash needs.
- 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.
- You can view the full analysis from the report here: NVDA Ratings Report