Financial Advisors Eye NVIDIA Corporation Amid Positive Analyst Updates
The US stock market continued its ascension and hit new records between January 16 and January 19, despite the government shutdown. As the Senate failed to vote on a spending bill, at midnight on Saturday the shutdown began and continued into Monday with hundreds of thousands of workers staying at home until Senators reached a deal to pass a short-term spending bill that will fund the government through February 8.
Main indexes had a volatile week, losing ground on Tuesday even though the Dow Jones Industrial Average passed 26,000 points for the first time in the intraday trading and S&P 500 traded above 2,800 for the first time. However, on Wednesday, both indexes pared the losses and closed at record highs, before inching lower on Thursday as the possibility of a government shutdown became more prominent. Nevertheless, on Friday the stock market closed higher on the back of strong corporate earnings.
In this way, the S&P 500 inched up by 0.86% last week, while the Dow Jones Industrial Average and Nasdaq Composite gained 1.04% each.
The kick-off of the fourth-quarter earnings season helped US stocks maintain their momentum despite political uncertainty. According to FactSet, 11% of the companies in the S&P 500 posted their fourth-quarter reports through January 19. Among these companies, 68% posted better-than-expected EPS and 85% reported revenue above estimates. Across sectors, most companies that missed the estimates were Financials, many of which took massive one-time charges related to the recent tax reform. The Financial sector is the only one that posted a decline in earnings for the fourth quarter, while Energy, Materials, Technology and Utilities reported or are expected to post double-digit earnings growth.
However, Financial Advisors did not pay attention to companies that posted their financial results last week, or so it seems from the list of 20 most searched tickers compiled by TrackStar, InvestingChannel’s official newsletter capturing and analyzing the trends of Financial Advisors. Only one company in the list disclosed its earnings last week, Bank of America Corp (NYSE:BAC), which ranked on the 19th spot. Instead, Financial Advisors focused on other developments, such as analyst updates.
The list of 20 most searched tickers among Financial Advisors shows NVIDIA Corporation (NASDAQ:NVDA) on the first spot. Last week, NVIDIA Corporation received one analyst upgrade from Bank of America Merrill Lynch and Susquehanna reiterated its rating on the stock but cited positive GPU sales data. Fellow chipmaker Advanced Micro Devices, Inc. (NASDAQ:AMD) also made the list but ranked on the seventh spot in connection with the Susquehanna note. Apple Inc. (NASDAQ:AAPL) was the third most-searched ticker last week, as the company’s stock was downgraded to ‘Buy’ from ‘Neutral’ at Longbow Research and Bank of America Merrill Lynch raised its price target on the stock to $220 from $180. In addition, KGI Securities cut its iPhone X lifetime sales forecast to 62 million units from 80 million units due to weakness in the Chinese market. Also last week, Apple said it would contribute $350 billion to the US economy in the next five years and it would repatriate its overseas cash taking a $38 billion charge in tax payments.
General Electric Company (NYSE:GE) was the fifth most searched ticker last week on the back of a New York Post report saying that activist investor Nelson Peltz’s Trian Fund Management is pushing the company to consider sale or spinoffs of many businesses. However, over the week, the stock reversed its trajectory and went into red territory year-to-date as investors and analysts remained unconvinced that a breakup will generate substantial value.
Among the top five most searched tickers last week were also nano-cap WPCS International Incorporated (NASDAQ:WPCS) and microcap ITUS Corp (NASDAQ:ITUS), on the second and fourth spots, respectively, as both stocks saw big price swings.
Let’s now take a closer look at NVIDIA Corporation (NASDAQ:NVDA) and the updates that landed the stock at the top of the list of most searched tickers. On Friday, Bank of America Merrill Lynch analysts raised their price target on NVIDIA Corporation (NASDAQ:NVDA)’s stock to $275 from $251 with a ‘Buy’ rating. Analyst Vivek Arya cited December online gaming data that suggests a larger upgrade opportunity for NVIDIA cards and strength in cryptocurrency. Arya also mentioned the upside in high performance computing that was highlighted in Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM)’s fourth-quarter report. Aside from increasing the price target, the BofA Merrill Lynch analyst also raised his 2018 EPS estimate for NVIDIA Corporation (NASDAQ:NVDA) by 5% and 2019 EPS estimate by 10%.
A day earlier, Susquehanna analyst Christopher Rolland suggested that NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD) may have benefited from Ethereum-related GPU sales of more than $500 million last quarter, which should result in better fourth-quarter results and near-term guidance. However, while the cryptocurrency mining trend continued into 2018 and Rolland estimates it brought in more than $200 million in GPU sales so far, the analyst also sees long-term risks for both companies. Rolland maintained his ‘Neutral’ rating on both stocks, but cut Advanced Micro Devices, Inc. (NASDAQ:AMD)’s price target to $13 from $15.
In two smaller developments last week, NVIDIA Corporation (NASDAQ:NVDA) was included among the top 10 holdings of the new Amplify blockchain ETF and Chinese carmaker Chery Automobile Co. said it would use the ZF ProAI self-driving platform that NVIDIA Corporation (NASDAQ:NVDA) developed in partnership with Baidu Inc (ADR) (NASDAQ:BIDU) and ZF Friedrichshafen.
Since the beginning of the year, NVIDIA Corporation (NASDAQ:NVDA)’s stock has surged by more than 20%.