Please ensure Javascript is enabled for purposes of website accessibility

Why NVIDIA Might Keep Running

By Brian D. Pacampara, CFA – Feb 3, 2014 at 10:17AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Does this analyst make a good case? Or is it just more noise from Wall Street?

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of NVIDIA (NVDA -1.51%) gained slightly this morning after Susquehanna upgraded the graphics chipmaker from negative to neutral.

So what: Along with the upgrade, analyst Chris Caso boosted his price target to $14 (from $10.50), representing about 11% worth of downside to yesterday's close. While Caso isn't exactly bullish on NVIDIA's appreciation prospects, he thinks that better graphics processing unit, or GPU, trends could stabilize the stock's risk going forward.

Now what: Susquehanna thinks that NVIDIA's risk/reward trade-off, although still not attractive, is certainly improving. "Our most recent checks have noted an improved tone within NVDA's GPU business, mainly due to product shortages by AMD (AMD -1.65%) that are limiting the competitive pressure," noted Caso. "On Tegra, we still hold low expectations for this business, but after a year of estimate reductions, Street estimates are down sharply as well." When you couple those improved trends with NVIDIA's reasonable forward P/E of 20, I'd agree that stock is at least worth looking into.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Nvidia. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nvidia Stock Quote
$162.70 (-1.51%) $-2.49
Advanced Micro Devices Stock Quote
Advanced Micro Devices
$75.14 (-1.65%) $-1.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.