Tuesday, May 06, 2008

Nvidia (NASDAQ:NVDA): Cautious on the stock at this stage - Goldman Sachs

Goldman Sachs comments on Nvidia (NASDAQ:NVDA) ahead of quarterly results (May 8) saying both their checks and the recently released Mercury Research data suggest little upside to the current quarter, with slight headwinds from notebook GPUs and chipsets. GSCO is modeling FY1Q09 at $1,141 mn (-5.1% qoq)/EPS $0.34 vs. the Street at $1,153 mn (-4.1% qoq)/EPS $0.38. Perhaps more important, they think pockets of excess inventory at OEM customers could drive FY2Q09 guidance below the Street estimate of $1,123 mn/$0.37.

With the stock already up nearly 25% from recent lows, they think investor expectations could be somewhat inflated at this point. Firm remains cautious on the stock at this stage given 1) checks indicate excess inventory at graphics card OEMs that could drive lower-than-expected FY2Q guidance, 2) below-seasonal shipments by Nvidia's top customers Asustek and Microstar, 3) their view that there is limited upside to Nvidia's current market share in desktop GPUs and chipsets, and 4) the long-term competitive threat posed by Intel. Although valuation is still reasonable at 16X CY2009 EPS estimate, they await a better entry point as they think below-Street guidance for FY2Q09 is likely to drive a pullback in the stock from current levels.

Notablecalls: Expect to see weakness in NVDA today and possibly tomorrow.


DrJeff said...

Ouch. OMPI becomes another victim to the consumer lacking discretionary cash. Still like this one?

notablecalls said...

Long OMPI @ 7