Bear of the Day: NVIDIA (NVDA) – March 13, 2019

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NVIDIA (NVDA Free Report) has remained in the cellar of the Zacks Rank because analysts keep lowering their earnings estimates. That may change the closer they get to closing the deal to acquire Mellanox (MLNX Free Report) as analysts expect the merger to be accretive to earnings by as much as 10%.

 

But for now, this fiscal year (ends in Jan 2020) is projected to show a 20% drop in annual EPS, from $6.64 to $5.34. That’s a far cry from the consensus estimates which hovered near $8.50 for most of last year.

 

And revenues are expected to drop by 4.25% from $11.72 billion to $11.22 billion. This is also a steep drop from projections closer to $13 billion only a couple of quarters ago as some of NVIDIA’s core businesses like gaming and datacenters began showing declines late last year.

 

To visualize the growth re-set for NVIDIA, we can do no better than take a look at Zacks proprietary Price & Consensus chart which plots changes in annual EPS consensus against the stock price…

 

 

NVIDIA will no doubt remain a key player in the future of semiconductor technologies that rely on massively parallel architectures like big-data and artificial intelligence.

 

But until analysts stop lowering their earnings outlook and find the profit trough, there may be better buying opportunities ahead. The Zacks Rank will let you know.

 

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2019-03-14 21:50:10

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