Nvidia’s Q4 Earnings: Will Optimism Prevail?

Nvidia (NASDAQ:NVDA) will report its earnings for the fourth quarter of fiscal 2020 today after the market closes. The quarter ended on January 26. For the fourth quarter, analysts expect the company’s revenue and non-GAAP EPS to rise on a YoY (year-over-year) basis.

Wall Street analysts expect Nvidia to report revenue of $3.0 billion—34.5% growth from $2.2 billion in the same quarter of fiscal 2019. Analysts also expect the company to report a non-GAAP EPS of $1.67 in the fourth quarter—a significant rise from $0.80 in the fourth quarter of fiscal 2019.

Analysts’ consensus recommendation for Nvidia

Overall, analysts favor a “buy” recommendation for Nvidia. Among the 41 analysts, 70.7% recommend a “buy,” 24.4% recommend a “hold,” and 4.9% recommend a “sell.” As of Wednesday, analysts’ consensus mean target price was $259.15, which implies a 12-month return potential of -4.9%. The median target price is $259.00 today.

Revised target price

On Wednesday, Wedbush analyst Matt Bryson raised his target price on Nvidia stock to $295 from $243 with an “outperform” rating. According to a report from TheFly, “The analyst believes upside in Nvidia’s data center sales is probable in light of recent stronger hyperscale buying trends. Moreover, should Nvidia close its proposed Mellanox deal, his numbers for fiscal years 2020 and 2021 could increase considerably with the latter’s strong performance over the past year having made the deal appear increasingly favorable for Nvidia.”

On Wednesday, Jefferies analyst Mark Lipacis raised its target price on Nvidia stock to $315 from $255 with a “buy” rating. Lipacis increased the target price because he expects the company to report a positive trend in its data center segment.

Susquehanna analyst Christopher Rolland also raised its target price on Nvidia stock to $310 from $285 with a “positive” rating. According to a report from TheFly, “The analyst said Street estimates appear reasonable and he believes the company is well positioned to outperform peers in 2020 as they are set to benefit from a litany of upcoming 7m launches throughout the year.”

On Tuesday, Oppenheimer analyst Rick Schafer increased its target price on Nvidia stock to $300 from $250 with an “outperform” rating. Deutsche Bank and Wells Fargo raised their target prices for the stock from $190 to $220 and $270 to $290, respectively. On Monday, RBC raised its target price for the stock from $251 to $301.

Peer comparison

In the fourth quarter of 2019, Advanced Micro Devices (NYSE:AMD) reported revenues of $2.13 billion, which implies a rise of 49.9% YoY. Also, the company reported a non-GAAP EPS of $0.32 in the fourth quarter, which implies a rise of 300% YoY. To learn more, see AMD Stock Fell Due to Disappointing Guidance.

In the fourth quarter of 2019, Intel (NASDAQ:INTC) reported revenues of $20.21 billion, which implies a rise of 8.3% YoY. Also, the company reported an adjusted EPS of $1.52 in the fourth quarter, which implies a rise of 18.8% YoY. To learn more, see Why Intel Stock Could Rise on Q4 Earnings Beat.

Nvidia’s stock performance

Nvidia stock closed 1.74% higher on Wednesday and ended the trading day at $472.54. The stock was trading 0.1% below its 52-week high of $272.80 and 105.54% above its 52-week low of $132.60. At the closing price on Wednesday, Nvidia’s market cap was $166.8 billion. On a YTD (year-to-date) basis, the stock has risen about 15.8%.

Nvidia closed 8.8% above its 20-day moving average of $250.43. The stock closed 14.5% and 25.4% above its 50-day and 100-day moving averages of $238.12 and $217.25, respectively. Meanwhile, the stock’s 14-day relative strength index score of 71 shows that it’s overbought.

In comparison, the S&P 500 Index has risen by 4.6% this year. Advanced Micro Devices and Intel stocks have gained 17.5% and 12.7%, respectively, YTD.

On Wednesday, Nvidia’s dividend yield was 0.23%. To learn more about Nvidia’s valuation, read Why Nvidia Stock Could Rise after Its Q4 Earnings.