Analyst Downgrades NVIDIA; Claims no “Major Catalysts” until Second Half 2012
We have received word from 111-year old investment group Sterne Agee that their analysts are removing NVIDIA from their "Catalyst Driven Idea List", claiming lack of innovation until second half of 2012.
NVIDIA's recent enthusiasm over Tegra 3 wasn't met with as many design wins as the analysts expected, and the fact that 2011 came and went without Kepler didn't went unnoticed with the financial analyst community.
If you feel that NVIDIA stock is unjustifiedly low at "just" $16 mark, the fact is that there are financial analysts who will call the company out if they feel they're underperforming. According to 111-year old Sterne Agee investment group, NVIDIA is doing just that – underdelivering. The analyst firm announced they're removing NVDA from "Catalyst Driven Idea List", their in-house overview of progressive companies.
Vijay Rakesh and Mark Kelley, financial analysts with the group weighed heavily on NVIDIA's loss of Tegra 2 design wins and lack of major design wins for Tegra 3, as well as increased competition from AMD:
"We had put NVDA on our Catalyst Driven Idea list on January 3 ahead of anticipated catalysts at CES and Mobile World Congress (MWC). While there were some catalysts at CES with the quad-core Tegra 3 integrating Touch on its Ninja 5th core, CES also saw a Win8 Tablet prototype running an NVDA Tegra. While we believe there could be more catalysts with MWC February 27, we believe NVDA shares are fairly valued here. MWC catalysts could include Tegra 3 handsets with Icera baseband and some 7-10 tablets running Android Ice Cream Sandwich.
Overall PCs Continue to be Weak & New Tablet Ramps are Just Getting Announced – We believe near term PCs are seasonally weaker, and while HDD supply is improving, we believe PC demand continues to be weak. Also for NVDA, Tegra 2 into tablets is ramping down, and while the company could have new Tegra 3 design wins into tablets, we believe the production ramp on any new tablets in the April Q will not be as material.
Discrete GPU Competition — With AMD ramping 28-nm Radeon HD7970 which delivers 5-30% better graphics performance than competitor GPUs on the market, paired with integrated APU Llano and INTC's Ivy Bridge-Haswell, we continue to believe the core discrete GPU market could have some structural challenges."
The question remains if this removal from the list and claim that the stock price is a bit too high for their internal PT (Price Target). You can read the full report here.