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Nvidia Shares Shoot Up on Analyst Upgrade
Tuesday March 21, 11:37 am ET
Nvidia Shares Jump As Analyst Upgrades Stock; Sees Revenue Growth Accelerating
NEW YORK (AP) -- Shares of graphic chip maker Nvidia Corp. shot up on Tuesday after an analyst upgraded the stock on the belief that revenue growth will accelerate.
Shares of Nvidia, which have traded between $20.92 and $50.72 over the last year, were up $3.05, or 6.3 percent, at $51.45 in morning trading on the Nasdaq, a new 52-week high.
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Lehman Brothers analyst Arnab Chanda, said he has misunderstood Nvidia's diversification strategy over the last ten months, and upgraded the stock to an "Overweight" rating from "Underweight."
He also lifted his estimates for Nvidia's fiscal year ending January 2007 to earnings of $2.35 per share on $2.78 billion in revenue, up from a previous estimate of $2.20 per share on $2.72 billion in revenue.
Additionally, Chanda raised his 2008 fiscal year estimate to earnings of $2.65 per share on $3.1 billion in revenue, up from $2.35 per share on $2.91 billion in revenue. Analysts polled by Thomson Financial are currently looking for $2.33 per share on $2.78 billion in revenue for the 2007 fiscal year, and $2.58 per share on $3.08 billion in revenue for 2008.
"We believe that our estimates assume significantly slower growth than Nvidia's internal expectations for its businesses," Chanda wrote in a note. "We believe that the launch of Microsoft's Vista operating system could change the growth rate of discrete (separate) graphics. In order to utilize the full features of the operating system, we believe that consumers may upgrade their integrated graphics based personal computers with a higher number of add-in graphics cards.
"Therefore, the mix of integrated versus discrete, which is at an all-time high of 70 to 30, may reverse, causing both ATI Technologies Inc. and Nvidias businesses to accelerate their growth, since PC graphics remains the single largest segment of revenues even today."
Shares of ATI Technologies shares were trading up 34 cents, or 2.3 percent, at $14.84 on the Nasdaq.