Nvidia Remains JMP's 'Best Idea'…Here's Why

May 27, 2015

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In a report published Wednesday, JMP analysts reiterated their Market Outperform and price target of $28 on NVIDIA Corporation (NASDAQ: NVDA). The company is well positioned to benefit from several market trends.

The analysts expressed their confidence that “the company is moving beyond its legacy PC and mobile exposure and is well positioned to capitalize on Gaming and Virtual Reality trends, Enterprise GPU virtualization, HPC and Cloud acceleration, and the evolution towards autonomous driving.”

The analysts believe that NVIDIA holds pricing strength and category leadership in the high-end gaming segment. Also, there is evidence that Apple, Inc. (NASDAQ: AAPL) is likely to be interested in developing a car, in which NVIDIA could play a lead role, similar to its role in the one being developed by Tesla Motors, Inc. (NASDAQ: TSLA).

In addition, the analysts expect the company’s Cloud, HPC and NVIDIA Enterprise businesses to grow ahead of the computing market fundamentals.

“We like that shares of NVDA have been essentially market performers without running up into the historically volatile summer trading season, and we also like that numbers have been brought down in conjunction with PC industry weakness that we see proving a diminishing headwind to earnings growth going forward,” the analysts said.

According to the JMP report, the current share price offers an attractive opportunity to invest in the stock before several potential positive catalysts materialize in the near future.

“We see the potential for Virtual Reality (VR) and/or Autonomous Driving to prove billion dollar markets that Nvidia is uniquely positioned to serve. We believe NVDA is an under-appreciated M&A target, particularly in the context of the broad range of OEM suitors that could use its IP across new media, next-gen gaming, robotics, and autonomous driving markets,” the analysts added.