It is always interesting to watch someone going against the grain. Counter opinions can offer insights which those in line with the consensus view will probably not provide.
Which brings us to Deutsche Bank analyst Ross Seymore – currently the lone Nvidia (NVDA) skeptic on Wall Street.
Ahead of the GPU giant’s F1Q22 report (Today, AMC), the analyst reiterated a Hold rating and a $575 price target. The implication for investors? Downside of 8%. (To watch Seymore’s track record, click here)
So, what’s Seymore’s beef with Nvidia, a company that has been exhibiting rude health for a sustained duration and has several secular tailwinds blowing at its back? Actually, there is no beef. Seymore expects a “strong report and guide” and thinks the trends concerning Nvidia’s core revenue drivers – gaming and data center – remain robust as ever.
In fact, Seymore’s forecast for revenue of $5.52 billion in the quarter is “above the high end of the original guidance range” and higher than the consensus estimate of $5.41 billion. Additionally, the analyst expects EPS of $3.35, also above Wall Street’s $3.28 estimate.
Same for the outlook for F2Q22; the Street has $5.48 billion in revenue and EPS of $3.29, Seymore has $5.57 billion and $3.37, respectively.
But now to the elephant in the room, which can be described in one word: crypto.
While Seymore welcomes Nvidia’s “transparency on this topic (citing specific CMP revenue expectations in its OEM/Other segment” and applauds the company’s initiative to slash the hash rate of RTX 3080, 3070, and 3060Ti GPUs, and “target true gamer demand,” the issue is a sticking point.
“Despite these efforts,” The 5-star analyst said, “The downside revenue risk of a crypto-correction remains top of mind for investors given the $1b+ impact during the last crypto cycle (C2H18). Consequently, despite our expectations for continued strong fundamentals from NVDA, we believe uncertainties surrounding the source & sustainability of demand will likely remain as valuation headwinds.”
So, there you have it. We’ll have to agree to disagree, appears to be the sentiment amongst Seymore’s colleagues; all 16 other recent reviews say Buy, naturally culminating in a Strong Buy consensus rating. The average price target stands at $705, suggesting upside potential of 13% in the year ahead. (See NVDA stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
