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Stock Ideas Wall Street Stock Ideas Buy the Shares of NVIDIA (NVDA) at a Maximum Entry Price of 32.89
Stock Ideas Wall Street Stock Ideas Buy the Shares of NVIDIA (NVDA) at a Maximum Entry Price of 32.89 
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| Buy the Shares of NVIDIA (NVDA) at a Maximum Entry Price of 32.89 |
| Tuesday, 18 September 2007 | ||||||||
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The target price for this recommendationis 39.47. The stop-loss price for this recommendation is 29.60. NVDA Shares are currently at32.40. Rationale/trade Drivers Fundamentals:According to Hoover’s, NVIDIA is a fabless semiconductor company designs high-definition 2-D and 3-D graphics processors for gaming and industrial- design applications.Its graphics chips, especially the flagship GeForce line, are used by major PC makers, such as Apple, Dell, Gateway, and Hewlett-Packard, as well as in add-in boards and motherboards produced by Asustek Computer (12% of sales) and other companies. NVIDIA also provides complementary graphics driver software, as well as graphics chipsets -- clusters of components with integrated graphics functions that aid the operation of PC microprocessors.On August 9, the company announced second-quarter GAAP earnings of 43 cents per share, exceeding analysts' expectations by nine cents. Revenue rose 36 percent year-over-year to $935.3 million versus the $859.8 million consensus. The company also guided third-quarter revenue estimates significantly above consensus. Technical:After a brief pullback following its earnings announcement (and coincident with the overall market’s mid-August plunge), NVIDIA rallied strongly to make several new all-time highs through early September.More recently, the stock has pulled back to expected support at 32. This area acted as resistance in July and August. Also, NVIDIA’s 50-day moving average (near 31) has provided staunch support over the past several months. The stock has been a big outperformer in 2007, gaining more than 30 percent. By comparison, the S&P 500 Index (SPX – 1477.08) is up about four percent this year.Sentiment:Even with the strong fundamental and technical backdrop, Wall Street remains lukewarm toward NVIDIA. According to Zacks, seven of 18 analysts rate the stock a "hold" or worse and one of those has a "strong sell" rating on it.Also, a couple of brokerage downgrades followed its earnings report, both based on valuation. These bets against the stock suggest that sideline money still exists that can push the stock higher.
Short interest is up more than 60 percent in the last three months to more than 19.1 million shares. That's equal to almost six percent of the stock's float. This suggests that skeptics are betting against the stock's recent technical and fundamental strength. As contrarians, we view this pessimism bullishly. Due to the strong outperformance and solid fundamentals amid heavy skepticism, NVIDIA sports a Schaeffer’s Equity Scorecard rating of 7.0 out of 10.0, suggesting the path of least resistance is higher. Finally, a major investment daily newspaper has NVIDIA ranked as one of its top stocks in the Electronics – Semiconductor Manufacturing group. Source : This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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