NVIDIA Corporation (NASDAQ: NVDA) has provided investors a golden opportunity in 2020 for steady growth. The companies share price has gained 132% in value in 2020 alone. The tech giant manufactures Graphic Processing Units (GPU) for Gaming and specialised markets. With such positive growth, analysts have weighed in and the 12 month outlook may surprise you. This article will breakdown what you need to know about NVDA’s stock forecast for 2021.
Table of contents
What are analysts forecasting for NVDA stock?
Firstly, the companies outlook from analysts perspective is overwhelmingly bullish. Across the board of 37 Wallstreet analysts, the average rating from NVDA stock is a buy (29/37 Buy ratings). The average 12 month price target for NVDA stock is $536.32 a share. The higher end price targets from analysts reach as high as $700 a share, suggesting an upside potential of 34%. Furthermore, the lowest target released from analysts last month was at $500 a share (downside of only -3%).
Some of the largest institutions have weighed in on NVDA
Evidently, analyst sentiment has cemented confidence in the longer term performance of NVDA on Wallstreet. Here are some of the more recent targets released by some of the largest financial institutions in the world.
- 11/19/2020 Barclays – analysts increased the 12 month price target from $525 to $550 a share. The overall rating from Barclays is overweight, suggesting the UK financial institution sees stable growth for NVDA stock.
- 11/19/2020 Bank of America – analyst Vivek Arya increased the price target from $650 to $665 a share. The target suggest an upside potential of 29%. BoA are clearly confident in the tech giant.
- 11/19/2020 UBS Group – analysts increased the 12 month price target from $625 to $650 a share. Evidently, both UBS and BoA are very confident the stock will break the $600 price barrier in 2021.
- 10/6/2020 JP Morgan Chase & Co – with a rating of overweight, analysts increased the 12 month price target to $605 a share.
What are the financial forecasts for NVDA moving into 2021?
Firstly, the strong revenue growth for the company in 2020 has been a key driving force in investor confidence. In the most recent quarter, the company recorded revenue of $4.73 Billion, a 57% improvement year on year. The company actually broke multiple records in quarterly revenue, being gaming revenue, Data centre revenue and overall revenue.
“NVIDIA is firing on all cylinders, achieving record revenues in Gaming, Data Center and overall… The new NVIDIA GeForce RTX GPU provides our largest-ever generational leap and demand is overwhelming. NVIDIA RTX has made ray tracing the new standard in gaming.”said Jensen Huang, founder and CEO of NVIDIA.
The revenue forecasts for NVDA for 2021-2022
The annual revenue forecasts for 2021 suggest an accrued revenue of $16.49 Billion according Yahoo Finance data. Moving forward the estimated revenue for 2022 is set to rise to $19.85 Billion. This would be a realised 20% growth in revenue for 2022, which is relatively strong for a large blue chip stock. Furthermore, the EPS predictions annualised tend to follow a 50% improvement YOY for 2021 and 2022. The 2022 EPS is estimated around $8 annually, which is a significant improvement from 2020.
What are the ‘smart money’ indicators saying?
The institutional ownership changes can provide investors insight into how larger fund managers perceive NVDA stock. Changes of ownership can be due to many reasons, however certain indicators can set off alarm bells for investors. For example, unusual selling from some of the companies largest institutional holders can be a red flag for investors. The largest holder of NVDA stock is Nuveen Asset Management with a market value of $2.86 Billion. For this quarter, Nuveen increased their holdings by 3.2%.
In summary, this quarter produced a surplus of ownership with institutions buying the stock at a greater volume than selling. This is in comparison to the previous quarter with more institutional investors selling than buying. Historically, the companies greatest influx of smart money was in the Q1 of 2019 with a $20 Billion influx. If you had bought shares after this data was made public in April 2019, your shares would be worth 173% more today.
I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research.
In conclusion, NVDA is showing some positive signs moving into 2021 for long term investors. The positive analysts sentiment, aggressive revenue growth and a surplus in institutional ownership has set the company up for a strong 2021. This is not to mention its largely publicised acquisition with ARM which is a classic example of vertical integration. NVDA stock will be one to watch closely as we transition into 2021.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.