Nvidia is a buy even with weaker guidance from China lockdowns, Wall Street says
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After Nvidia issued less than anticipated guidance, a number of analysts reiterated their buy ratings and lowered price targets for the company. Nvidia’s shares fell in extended trading Wednesday as the company stated on Wednesday it expected sanctions in Russia to result in a $500m hit and that ongoing Covid lockdowns will continue in China. The bottom and top lines of Nvidia’s gaming, data center and other businesses still beat expectations. Nvidia shares are now positive after the company’s losses have been reversed and they turned positive on Thursday morning. After Nvidia’s results were published, analysts issued numerous reports. Many of these highlighted momentum in Nvidia’s data centre business. The chip maker’s shares are currently down 42% over the past year. In a Thursday note, Blayne Curtis, a Barclays analyst wrote that Data Center is still the show’s star and expects the end market to keep growing throughout the year. All analysts cut their price targets, Needham’s Rajvindra Gill cutting as high as 40% due to the lower outlook. The lower guidance comes due to weaker gaming demand, according to many. Analysts expect that consumer demand will rebound somewhat after the lifting of China’s lockdown, but they anticipate it pulling back even further in 2019. Morgan Stanley’s analysts are projecting a correction in gaming of around 16% by 2023. Stacy A. Rasgon, a Bernstein analyst wrote that many investors wanted to be part of the NVDA story even after stock drops. However they were hesitant about taking on potentially dangerous gaming dynamics. “Viewed this way, investors received at least some of their desired results with a moderately-sized gaming cut embedded into guidance and a strong datacenter narrative Rasgon stated. The stock received neutral ratings from two analysts, one of whom said that the stock was too early to be re-invested despite its “very bright long term outlook”. Here are the ratings and price targets: Jefferies: Buy, PT $370 Barclays: Overweight, PT $295 JPMorgan: Overweight, PT to $285 from $350 Citi: Buy, PT to $315 from $350 Morgan Stanley: Equal-weight, PT to $182 from $217 Rosenblatt Securities: Buy, PT $400 Susquehanna Financial Group: Positive, PT to $260 from $280 Bernstein: Outperform, PT $225 Benchmark: Buy, PT to $228 from $365 Needham: Buy, PT to $240 from $400 Baird: Neutral, PT to $165 from $225 Bank of America: Buy, PT to $270 from $320 UBS: Buy, PT $280 Wells Fargo: Overweight, PT $250 Atlantic Equities: Overweight, PT to $205 from $370 Raymond James: Strong Buy, PT to $250 from $365 —CNBC’s Michael Bloom contributed to this report.
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