Thursday, November 02, 2006

Calls of Note Part 3

- Morgan Stanley is positive on NVIDIA (NASDAQ:NVDA) ahead of Q3 results (Nov 9) saying they e expect the company to report another solid positive earnings surprise. In addition, they believe it is highly likely that the company will be able to report a full income statement now that the review and expected resolution of its option grant issues have been identified and addressed by the company's internal audit committee.

Based on their belief that NVIDIA has enjoyed strong demand for core logic chipsets, as well as notebook and desktop GPUs, they have increased their third-quarter estimate from 9% to 13% sequential revenue growth, and EPS estimate has increased to $0.36 from $0.35.

NVDA remains one of firm's favorite stocks: Year-to-date, NVDA has been the single-best performing stock in their universe, with a 76% gain versus a 3% gain in overall universe and a 6% decline in the SOX index. While NVDA may need to consolidate these gains in the near term, it is difficult to find a company in their universe with stronger near-term fundamentals and intermediate-term opportunities. Consequently, the firm reiterates Overweight-V rating, and have increased 12-month stock-price target to $40 from $35.

Notablecalls: Looking at NVDA chart, I must say I think it looks toppish. While MS is not the only firm positive on NVDA this AM I don't think it will bounce much here.

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