NEW YORK (TheStreet) -- Shares of NVIDIA Corp (NVDA) were down 1.65% to $21.50 in early market trading Wednesday, after visual computing company was downgraded by analysts at Nomura Securities earlier today.
The firm lowered its rating on shares of NVIDIA to "neutral" from "buy" with a price target cut to $18 from its prior $23.
Nomura analysts said a number of factors could pressure demand for its video graphics cards in the second half of the year.
The firm added that investors should expect multiple growth headwinds for PC gaming demand.
Santa Clara, Calif.-based NVIDIA 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 A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NVIDIA CORP (NVDA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NVDA's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- The current debt-to-equity ratio, 0.31, 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 5.94, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 62.89% to $246.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 19.77%.
- The gross profit margin for NVIDIA CORP is rather high; currently it is at 61.42%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 11.64% trails the industry average.
- You can view the full analysis from the report here: NVDA Ratings Report