Stock Market Update 25-May-2023

By Matthew Otto

Analysts Bullish on NVIDIA: Multiple Price Target Upgrades Announced, High Mark Set at $500

NVIDIA announced its first-quarter financial results for fiscal year 2024. The company reported revenue of $7.19 billion, reflecting a 19% increase from the previous quarter, but a 13% decrease from the same period last year. Notably, this revenue surpassed analyst expectations of $6.5 billion. The semiconductor giant also posted adjusted earnings per share of $1.09, beating Wall Street’s consensus estimate of 92 cents, as per FactSet.

The company’s data center segment emerged as a key growth driver, with record revenue of $4.28 billion. This represents a 14% increase from a year ago and an 18% increase from the previous quarter. The robust performance of this segment can be attributed to the surging demand from AI applications. Conversely, the gaming segment witnessed a decline, with revenue standing at $2.24 billion – a 22% increase from the previous quarter but a significant 38% decrease from a year ago.

Looking ahead, NVIDIA provided an encouraging outlook for the second quarter of FY24. The company’s revenue forecast of $11 billion significantly surpasses the analyst consensus of $7.2 billion..

Commenting on the results and the industry trends, NVIDIA CEO Jensen Huang emphasized the ongoing industry transitions towards accelerated computing and generative AI. The company has ramped up the production of its entire data center family of products – including the H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand, and BlueField-3 DPU – to meet the rising demand. These cutting-edge products are central to powering the latest AI applications, which continue to garner substantial interest from investors and consumers alike.

Wall Street Action

Stifel analyst Ruben Roy maintained a Hold but raised the price target from $300 to $370.
B of A Securities analyst Vivek Arya retained a Buy rating and increased the price target from $340 to $450.
Baird analyst Tristan Gerra upgraded NVIDIA from Neutral to Outperform and lifted the price target from $300 to $475.
Craig-Hallum analyst Richard Shannon raised NVIDIA from a Hold to a Buy and set a new price target of $500.
Jefferies analyst Mark Lipacis retained a Buy rating and hiked the price target from $300 to $472.
Evercore ISI Group analyst C Muse held his Outperform rating and boosted the price target from $320 to $500.
Morgan Stanley analyst Joseph Moore maintained an Overweight rating, elevating the price target from $304 to $450.
Wedbush analyst Matt Bryson upgraded NVIDIA from Neutral to Outperform and set a price target of $490.
TD Cowen analyst Matthew Ramsay kept an Outperform rating and increased the price target from $300 to $500.
Truist Securities analyst William Stein held his Buy rating and raised the price target from $322 to $470.
Mizuho analyst Vijay Rakesh maintained a Buy rating and elevated the price target from $290 to $400.
Raymond James analyst Chris Caso continued with a Strong Buy and boosted the price target from $290 to $450.
JP Morgan analyst Harlan Sur sustained an Overweight rating and escalated the price target from $250 to $500.
Wells Fargo analyst Aaron Rakers retained his Overweight rating and raised the price target from $320 to $450.
Susquehanna analyst Christopher Rolland maintained a Positive rating and increased the price target from $350 to $450.
Oppenheimer analyst Patrick Scholes sustained his Outperform rating and raised the price target from $350 to $420.
Needham analyst Rajvindra Gill maintained a Buy and lifted the price target from $300 to $460.
Goldman Sachs analyst Toshiya Hari held his Buy rating and raised the price target from $275 to $440.
Barclays analyst Blayne Curtis kept his Overweight rating and increased the price target from $275 to $500.
Bernstein analyst Stacy Rasgon held an Outperform rating and boosted the price target from $300 to $475.
Keybanc analyst John Vinh maintained an Overweight rating and raised the price target from $375 to $500.
Citi analyst Atif Malik has increased the price target to $420.

Looking at AnaChart we spot a few analysts who called the surprise in advance :

Citi analyst Atif Malik, who not only raised the price target to $420 today but also earlier in the week from $305 to $363.
John Vinh from Keybanc who upgraded the price target to $375 from an earlier $320 earlier this week.
William Stein from Truist who raised his price target from $290 to $333 earlier this month.
A significant shift was made by Frank Lee from HSBC who practically doubled his price target in mid-April from $175 to $355, changing his rating from Reduce to Buy.

Snowflake Lowered Revenue Guidance, Has Strong Q1 Earnings

Snowflake Software reduced its forecast for the July quarter and the fiscal year ending in January 2024. Despite reporting solid results for the April quarter, the company’s new guidance fell short of the Street consensus.

Key Q1 Financial Results:

Revenue: $623.6 million, a 48% increase YoY, surpassing the Street consensus of $609 million.
Product revenue: $590.1 million, a 50% increase YoY, exceeding the company’s own forecast of $568 million to $573 million.
GAAP loss per share: 70 cents.
Adjusted profits: 15 cents a share, 10 cents higher than Street estimates.

Reduced Guidance:

For the July quarter, Snowflake predicts product revenue to be $620 million to $625 million, below the Street consensus of $649 million. The projected non-GAAP operating margin is expected to be 2%.
For the full fiscal year, the company now predicts a product revenue of $2.6 billion, up 34%, but below the previous guidance of $2.7 billion. It also decreased its non-GAAP operating margin forecast from 6% to 5% but increased its forecast for adjusted free cash flow margin to 26% from 25%.

The company did not provide an explanation for the reduction in its forecast in its earnings press release.

Analysts Retain Bullish Stance on Snowflake Despite Lowered Price Targets Following Q2 Guidance

Mark Schappel from Loop Capital downgrades the price target on Snowflake from $200 to $195, but keeps his Buy rating.
Ittai Kidron from Oppenheimer stands pat with a $190 price target, maintaining an Outperform rating on the stock.
J. Derrick Wood from TD Cowen reduces his price target from $205 to $185, but retains an Outperform rating.
Gregg Moskowitz from Mizuho trimmed his price target from $185 to $175, still recommending a Buy.
Michael Turrin from Wells Fargo adjusts the price target from $200 to $185, but insists on an Overweight rating.
Mike Cikos from Needham holds steady with a $180 price target, reiterating his Buy rating.
Joe Goodwin from JMP Securities lowers his price target from $215 to $200, but keeps a Market Outperform rating.
Karl Keirstead from UBS cuts his price target from $170 to $155, sustaining a Neutral rating.
Raimo Lenschow from Barclays scales back his price target from $171 to $165, but maintains an Overweight rating.
Brent Bracelin from Piper Sandler remains firm with a $194 price target, reiterating his Overweight rating on the stock.
JPMorgan’s Mark Murphy reduces his price target on Snowflake to $155.
Stifel analyst Brad Reback kept a Buy and lowered the price target from $185 to $180.

The trend of keeping the price targets is not new and continues from the end of 2021 while the stock had lost half its value. Notable standout is Scotiabank analyst Patrick Colville had the Snowflake with downside on his price target at $125 in the beginning of the year.

Analog Devices Reports Record Q2 Revenue but Forecasts Lower Q3; Declares Quarterly Dividend of $0.86 Per Share

Analog Devices reported adjusted earnings of $2.83 per share for the April quarter, an 18% increase from the same period in the previous year. The quarterly revenue rose by 10%, reaching $3.26 billion. These figures surpassed analysts’ expectations, who predicted adjusted earnings of $2.75 per share and sales of $3.21 billion according to a FactSet poll.

However, Analog Devices’ revenue forecast for the third quarter of the fiscal year, which was lower than expected. CEO Vincent Roche noted that while they anticipate a moderation in revenue for the second half of the year due to economic uncertainties and supply chain normalization, he is confident in the company’s ability to navigate these short-term business cycles.

For Q3 of fiscal 2023, Analog Devices forecasts adjusted earnings per share in the range of $2.42 to $2.62 and revenue between $3 billion and $3.2 billion. This tempered outlook seems to have led to the drop in the company’s share price. The Board of Directors has declared a quarterly cash dividend of $0.86.

Analysts Maintain Positive Ratings on Analog Devices Amid Lowered Price Targets Post Q2 Report

Ambrish Srivastava from BMO Capital maintained his Outperform rating but decreased his price target from $215 to $200.
Truist Securities’ analyst, William Stein, retained his Buy rating, but trimmed his price target from $251 to $213.
Joshua Buchalter from TD Cowen also upheld his Outperform rating on Analog Devices, but reduced his price target from $225 to $200.
Gary Mobley of Wells Fargo sustained his Equal-Weight rating, but cut his price target from $190 to $185.
Stacy Rasgon from Bernstein maintained an Outperform rating on Analog Devices but lowered his price target from $220 to $210.
Rick Schafer, an analyst at Oppenheimer, persisted with his Outperform rating but downgraded his price target from $230 to $215.
Christopher Danely from Citigroup kept his Buy rating but reduced his price target from $225 to $200.
Joseph Moore at Morgan Stanley sustained his Equal-Weight rating but decreased his price target from $210 to $195.
John Vinh from Keybanc maintained his Overweight rating on Analog Devices, but cut his price target from $230 to $220.

Looking at AnaChart we see strong unison of lifted price targets that happened in February anticipating a stronger report that didn’t materialize. Barclays analyst Blayne Curtis stood out with a more conservative outlook that proved to be prudent.

Selected stock price target news of the day - May 25, 2023