The muted reaction of Nvidia stock to the company’s blowout earnings has one silver lining—the chip maker’s stock looks even cheaper now.
Nvidia shares slipped 1.54% to $216.12 in early trading Friday, after a 1.8% fall on Thursday in the session immediately after the company’s earnings report, where it beat expectations.
Barron’s argued in our recent stock pick that Nvidia was a bargain at around $226 and a forward price-to-earnings ratio of around 26 times.
The stock looks even more appealing now, trading at a forward PE of just over 22 times, according to FactSet. That compares with more than 95 times for Intel and nearly 47 times for Advanced Micro Devices.
The reaction to the earnings on Wall Street was almost unanimously positive. It marked the 14th consecutive quarter that Nvidia’s revenue and operating income beat Wall Street’s targets, according to data from FactSet.
The average target price on Nvidia stock has moved up to around $294, with 93% of the analysts covering the stock having a Buy recommendation or equivalent.
Benchmark Research analyst Cody Acree was one typical example, raising his target price on the stock to $335 from $250, with a Buy rating.
“Investors have simply become increasingly complacent in their expectations of Nvidia’s outsized execution, making almost any degree of outperformance look like a normal course business rather than a catalyst for a positive re-rating,” Acree wrote.
