Despite NVIDIA’s (NVDA) fiscal 2019 fourth-quarter underperformance, 26 out of the 38 analysts covering it have recommended “buys” on its stock, while 11 have rated it as a “hold.” Only one analyst has given the stock a “sell.”
Analysts have given the stock a target price of $185.71 with a median consensus estimate of $180.00. NVIDIA was trading at $157.34, a 12.6% discount to its consensus median target estimate, on February 15.
Growth to pick up in 2020
Though NVIDIA reported upbeat fourth-quarter earnings results, its earnings and revenue fell significantly from the previous year’s period on concerns related to rising inventories of older gaming chips amid the decline in the crypto market. Also, market conditions, especially in China, were uncertain in the quarter due to trade war fears, which further pressured the company’s fourth-quarter results. NVIDIA’s CFO, Colette Kress, stated on a recent conference call, “Hyperscale and cloud purchases declined both sequentially and year-on-year as several customers paused at the end of the year.”
However, NVIDIA believes that the weakness in the data center market is temporary, as the company is working with cloud providers such as Amazon (AMZN) and Microsoft (MSFT) on the adoption of its GPUs for inference. NVIDIA’s GPUs are already using their cloud services for their AI models.
Dividends and share buybacks
NVIDIA has been consistently rewarding shareholders with dividends and share buybacks. In fiscal 2019, NVIDIA returned $1.95 billion to shareholders through share buybacks and dividends, and it plans to return $3 billion to its shareholders in fiscal 2020. The company repurchased $1.58 billion worth of shares and paid dividends of ~$371 million in fiscal 2019.
NVIDIA is expected to pay its next cash dividend of $0.16 per share on March 22, 2019, to shareholders on record as of March 1, 2019. On February 15, NVIDIA’s dividend yield was 0.41%. NVIDIA’s peers Intel (INTC), Qualcomm, and Broadcom (AVGO) had dividend yields of 2.44%, 4.77%, and 3.76%, respectively, on the same day.