Earnings Beat Helps Nvidia Stock Shake Off China Headwinds

Five brokerages have issued price-target cuts this morning

Patrick Martin
May 17, 2019 at 10:07 AM
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The shares of Nvidia Corporation (NASDAQ:NVDA) have had an eventful morning. The chipmaker last night reported first-quarter adjusted earnings of 88 cents per share, beating out the forecasted mean of 81 cents per share. Revenue and second-quarter sales guidance also topped estimates, thanks to higher demand for gaming chips. In fact, CEO Jensen Huang described China's gaming market as "vibrant" in last night's conference call.

All of this has the stock up 1.2% to trade at $162.17 at last check. It had bounced back and forth between positive and negative in after-hours trading, with reignited U.S.-China trade tensions weighing on the shares. Despite the boost today, Nvidia stock is still heading towards its second straight weekly loss. On Monday, the shares breached their 100-day moving average, and have since settled around their post-bull gap levels from mid-March. 

Today's results have yielded five price-target cuts, including to $180 from $190 at Rosenblatt. This runs counter to the overall analyst picture though, with 17 out of 26 brokerages covering NVDA rating it a "buy" or better. Plus, the consensus 12-month price target sits all the way up at $185.43, a 15.8% premium to last night's closing perch at $160.19.

Nvidia options traders have been loading up on calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NVDA's 10-day call/put volume ratio of 2.28 ranks in the 76th annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.


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