Analyst: Too Many Headwinds for Nvidia Stock

NVDA is down more than 21% in 2022

Deputy Editor
Apr 11, 2022 at 9:29 AM
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Chipmaker Nvidia Corporation (NASDAQ:NVDA) is 4.1% lower ahead of the bell, last seen trading at $221.66, after Baird downgraded the equity to "neutral" from "outperform." The analyst also slashed its price target to $225 from $360, citing excess inventories that resulted in order cancelations, a slowdown in PC demand, and the new Russia embargo. Also weighing on the semiconductor stock this morning is news that the company is seeking approval to double its authorized shares, which would allow futures stock splits and the issuing of equity incentives without shareholder votes.

On the charts, Nvidia stock is trading back near the $220 level for the first time since mid-March. Fresh off its second-straight weekly loss, NVDA is also pacing for its fifth-daily drop. Year-to-date, the shares are down 21.4%.

Coming into today, the brokerage bunch was firmly bullish towards the equity. Of the 22 analysts in coverage, 19 call it a "strong buy." What's more, the 12-month consensus target price of $339.82 is a 53.1% premium to Friday's close. This all leaves ample room for additional downgrades and/or price-target cuts.

Options traders, meanwhile, have an appetite for puts. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio of 0.61 sits higher than 92% of readings in its annual range. This means that while long calls are still outnumbering long puts on an overall basis, the latter are getting picked up at a much quicker-than-usual pace.

It's also worth noting the equity's Schaeffer's Volatility Scorecard (SVS) sits at 97 out of 100, suggesting NVDA has exceeded options traders' volatility expectations over the past year.


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