NVIDIA (NVDA) Hits a 52-Week High on Solid Performance - Analyst Blog
Shares of NVIDIA Corporation ( NVDA ) hit a new 52-week high of $20.94 on the last trading day before Thanksgiving. The stock eventually closed a trifle lower at $20.92, representing a one-year return of 36.1% and a year-to-date return of 34.3%. The average trading volume for the last three months aggregated approximately 6,651K shares.
An impressive record of beating the quarterly earnings expectations along with an encouraging fourth-quarter fiscal 2015 outlook, solid cash flows and regular innovative product launches drove NVIDIA to the new high.
With respect to earnings surprise, this Zacks Rank #2 (Buy) stock has surpassed the Zacks Consensus Estimate in the last four quarters with an average surprise of 34.2%. Recently, NVIDIA reported better-than-expected third-quarter fiscal 2015 results, primarily backed by lower operating expenses as a percentage of revenues and higher growth in Tegra Processor, SHIELD tablet sales, GeForce GPU and Tesla sales.
Over the last 30 days, 8 out of 15 estimates for NVIDIA were revised upward for the current quarter, while 13 out of 15 estimates rose higher for fiscal 2015. The Zacks Consensus Estimate for the current quarter increased 3.6% (1 cent) to 29 cents and that for fiscal 2015 increased 3.9% (4 cents) to $1.06.
Some of the optimism related to NVIDIA shares may be attributed to the higher adoption of its Tegra processors. Recently, Honda Motor Co., Ltd. ( HMC ) announced that it is set to launch an in-dash Infotainment System powered by NVIDIA's Tegra mobile processor.
Prior to this, Google Inc. ( GOOG ) selected NVIDIA's Tegra K1 processor to power its Project Tango tablet development kit, which will help developers build applications featuring 3-D mapping and sensing capabilities. Moreover, Xiaomi, a leading Chinese mobile device manufacturer launched a tablet powered by TegraK1 processors.
It is worth mentioning that NVIDIA reported a phenomenal surge of 51% in revenues from Tegra processors in the last-reported quarter, aided by increase in the sale of auto infotainment systems, mobile devices and SHIELD tablets.
We believe that NVIDIA's innovative product pipeline consisting of the recently introduced SHIELD 2, mobile processor Tegra K1 and GeForce GTX 980 for desktops and mobiles will boost top-line growth. Moreover, strength in gaming and high-end notebook GPUs is the other catalyst, going ahead.
Nonetheless, the continued decline in PC sales is a cause of concern for NVIDIA's GPU segment. In a recent report, research firm IDC suggests that PC shipments will decline 2.7% in 2014 and 3.3% in 2015. Competition from the likes of Intel Corporation ( INTC ) and QUALCOMM Inc. remains an overhang on the stock.
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