By Michael Elkins
BMO Capital reiterated an Outperform rating on NVIDIA Corporation (NASDAQ:NVDA) and raised the price target on the stock to $240.00 (from $210.00) ahead of the tech company's 4Q23 earnings release. NVIDIA reports after the close on February 22 with a conference call to follow at 17:00 ET.
BMO analysts wrote in a note, "Our research suggests an increasing weaker environment for NVIDIA's Data Center business, particularly as it relates to F1Q and F2Q. Beyond the near term, we see a potentially meaningful multibillion dollar opportunity emerging for the company in generative AI. While our FY24 estimates are now below consensus, we are introducing our FY25 estimates, which are higher than consensus."
BMO lowered estimates for FY24 to $3.95 from $4.45 and introduced a FY25 (CY24) estimate of $5.85 (vs. $5.55 for consensus).
BMO's research suggests a weakening environment for the company's Data Center segment vs. prior assumptions, especially as it relates to F1Q and F2Q. As such, BMO's estimates are lower primarily due to lower assumptions for the Data Center business this year vs. prior assumptions.
With respect to upcoming earnings, BMO is in line with consensus for FY4Q23 and below consensus for FY1Q24. For FY4Q23, BMO expects NVIDIA to report revenues of $6.00 billion, up 1% q-q, and EPS of $0.81 vs. consensus' $6.02 billion, up 1% q-q, and $0.81, respectively. For FY1Q24, BMO expects NVIDIA to report revenues of $6.02 billion, flat q-q, and EPS of $0.78 vs. consensus' $6.32 billion, up 5% q-q, and $0.86, respectively.
Shares of NVDA are down 1.35% in mid-day trading on Tuesday.