Categories: TechnologyWorld

Nvidia price targets fall as outlook cut ‘worse than expected’

By BLOOMBERG

NEW YORK • Nvidia Corp analysts cut their price targets on the chipmaker yesterday, a move that came in reaction to the company lowering its fourth-quarter revenue outlook.

The disappointing guidance dashed recent signs of optimism that pain in the semiconductor industry, which has struggled with weak demand and high levels of inventory, could be nearing an end.

Multiple analysts said they had been anticipating weakness, but that the scale of the cut still came as a surprise.

The stock fell 1.6% in pre-market trading yesterday, extending a drop of nearly 14% in Monday’s session.

“Missing the quarter this badly in gaming indicates more significant challenges than we had anticipated, given that this is still a channel fill quarter for midrange/high end,” said an analyst from Morgan Stanley.

“The weakness in cloud and HPC (high performance computing) chips seems temporary, but Nvidia has become ‘a show me story with lower price-earnings assumptions’.”

Morgan Stanley downgrades the stock to equal weight from ‘Overweight’ and slashes price target to US$148 (RM608.28) from US$220.

An analyst from Jefferies Group LLC said: “The outlook was worse than we expected even though the firm removed Nvidia from its Franchise Picks list last week on concerns over the data centre business.

“We cut the price target to US$185 from US$246 but keep ‘Buy’ rating, as we continue to believe Nvidia benefits from secular trends in parallel processing.

“We cut earnings estimates for both 2019 and 2020 and speculate that it takes seven quarters for Nvidia to return to previous peak quarterly revenues.” — Bloomberg

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