NVIDIA shares close lower on Monday, Bernstein downgrades stock to “Market Perform”, expects growth challenges

Yesterday Bernstein downgraded NVIDIA Corporation (NVDA) from “Outperform” to “Market Perform”, citing severe challenges to growth for the technological company and prospects of continuously rising “headline risk”.

Bernstein has assigned a price target of $175 on the stock.

NVIDIA shares closed lower for the fourth time in the past fourteen trading sessions on NASDAQ on Monday. The stock went down 1.16% ($1.72) to $146.45, after touching an intraday high at $148.56 and an intraday low at $144.53.

Shares of NVIDIA Corporation have risen 9.70% so far in 2019 compared with an 8.10% gain for the benchmark index, S&P 500 (SPX).

In 2018, NVIDIA Corp’s stock retreated 31.01%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

“Following the companys somewhat chilly guidance cut … we believe the shares are likely to remain hamstrung,” Bernstein analyst Stacy Rasgon wrote in a client note, cited by CNBC.

“The latest cut appears much more fundamentally demand-driven, with the question of the true run-rate of the gaming business remaining up in the air for now,” Bernsteins Rasgon also noted.

In January, Nvidia revised down its revenue forecast for the fourth quarter of fiscal year 2019 due to “deteriorating macroeconomic conditions, particularly in China”. The company now projects fourth-quarter revenue to be $2.20 billion, down from $2.70 billion, as expected previously. This has been the second downward revision in the last three months.

“Q4 was an extraordinary, unusually turbulent, and disappointing quarter,” Jensen Huang, NVIDIAs founder and Chief Executive Officer, said in a statement.

“Looking forward, we are confident in our strategies and growth drivers….The markets we are creating – gaming, design, HPC, AI and autonomous vehicles – are important, growing and will be very large. We have excellent strategic positions in all of them,” Huang added.

NVIDIA Corp is expected to report fourth-quarter results on February 14th.

According to CNN Money, the 32 analysts, offering 12-month forecasts regarding NVIDIA Corporation’s stock price, have a median target of $180.00, with a high estimate of $250.00 and a low estimate of $120.00. The median estimate represents a 22.91% upside compared to the closing price of $146.45 on February 11th.

The same media also reported that 22 out of 37 surveyed investment analysts had rated NVIDIA Corporation’s stock as “Buy”, while 11 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for NVIDIA Corporation (NVDA) are presented as follows:

Central Pivot Point – $149.30
R1 – $154.47
R2 – $160.77
R3 – $165.94
R4 – $171.11

S1 – $143.00
S2 – $137.83
S3 – $131.53
S4 – $125.23