The NVIDIA Corporation (NASDAQ:NVDA) Q3 F2018 earnings report is due after closing bell on Thursday, and the Street is looking for earnings of 84 cents per share on $2.37 billion in sales. In last year’s third quarter, the chip maker reported earnings of 94 cents per share on $2 billion in revenue. NVIDIA guided for revenues of abut $2.35 billion, plus or minus 2%.
NVIDIA stock price target upped going into earnings
Going into the NVIDIA Q3 F2018 earnings release, Deutsche Bank analyst Ross Seymore maintained his Hold rating on the stock but increased his price target from $145 to $190 after also increasing his estimates for the chip maker. He feels that much of the “goodness” in the company is already reflected in its stock price, which is why he remains on the sidelines.
He’s expecting a “solid” third quarter from the company and expects to see revenues come in toward the high end of guidance at $2.41 billion. He sees the company’s strength as riding on the recent PC strength and also cryptocurrency and noted that the chip maker has beat the midpoint of its guidance by an average greater than 9% over the last nine quarters. In eight of the last nine quarters, NVIDIA even beat the high end of its guidance range.
Given the company’s long-running trend of beating its own guidance, it will probably take quite a lot to drive NVIDIA stock higher after the earnings release.
What to expect in the NVIDIA Q3 F2018 earnings release
Seymore estimates that the chip maker’s Gaming revenues grew 16% sequentially and made up 57% of total sales. He’s looking for a 10% sequential increase in Data Center revenues for 19% of total sales and flat Automotive revenues quarter over quarter. In the previous quarter, NVIDIA reported $1.2 billion in Gaming revenue, $415 million in Data Center revenue and $142 million in Automotive revenue.
The Deutsche Bank analyst pegs NVIDIA’s third-quarter gross margin at 58.6% and GAAP earnings at 97 cents per share, versus the consensus at 95 cents. Excluding stock-based compensation, he estimates NVIDIA’s earnings at $1.19 per share.
One topic that will likely resurface after the NVIDIA Q3 F2018 earnings release is cryptocurrency. Bears have been very concerned that cryptocurrency mining has been driving results at NVIDIA and also its competitor AMD because such demand is not seen as sustainable. Bears will likely be watching NVIDIA’s report to see whether its results were driven by “the wrong segment” like they feel AMD’s results were.
NVIDIA stock slipped by as much as 1.8% to $208.21 during regular trading hours on Wednesday.