Saturday, May 04, 2024 3:16:18 PM
Zacks Equity Research
September 14, 2023
4 min read
Nvidia (NVDA) closed the last trading session at $454.85, gaining 4.6% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $625.68 indicates a 37.6% upside potential.
The mean estimate comprises 34 short-term price targets with a standard deviation of $112.71. While the lowest estimate of $460 indicates a 1.1% increase from the current price level, the most optimistic analyst expects the stock to surge 141.8% to reach $1,100. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.
While the consensus price target is a much-coveted metric for investors, solely banking on this metric to make an investment decision may not be wise at all. That's because the ability and unbiasedness of analysts in setting price targets have long been questionable.
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However, an impressive consensus price target is not the only factor that indicates a potential upside in NVDA. This view is strengthened by the agreement among analysts that the company will report better earnings than what they estimated earlier. Though a positive trend in earnings estimate revisions doesn't give any idea as to how much the stock could surge, it has proven effective in predicting an upside.
Here's What You Should Know About Analysts' Price Targets
According to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.
While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?
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They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.
However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.
That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.
Why NVDA Could Witness a Solid Upside
There has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Recent NVDA News
- U.S. Stocks Close Mixed Following Lackluster Session • IH Market News • 06/21/2024 08:38:41 PM
- Honeywell Acquires CAES Systems for $1.9 Billion, Sarepta Therapeutics Surges 34%, Gilead Continues Gains • IH Market News • 06/21/2024 12:00:38 PM
- U.S. Futures Decline Ahead of Triple Witching, Oil Prices Edge Lower • IH Market News • 06/21/2024 12:00:27 PM
- Dow Closes Firmly Positive But Nasdaq, S&P 500 Give Back Ground • IH Market News • 06/20/2024 08:30:11 PM
- Nvidia May Lead Early Upward Move On Wall Street • IH Market News • 06/20/2024 01:10:49 PM
- U.S. Index Futures Surge; Oil Prices Increase • IH Market News • 06/20/2024 10:56:57 AM
- Trump Media Resells Stocks and Warrants; KB Home Exceeds Q2 Expectations, and More News • IH Market News • 06/20/2024 10:55:11 AM
- Nvidia Overtakes Microsoft To Become World’s Most Valuable Company • IH Market News • 06/19/2024 09:32:08 AM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/18/2024 09:16:15 PM
- Hewlett Packard Enterprise and NVIDIA Announce ‘NVIDIA AI Computing by HPE’ to Accelerate Generative AI Industrial Revolution • Business Wire • 06/18/2024 04:30:00 PM
- Fisker Files for Bankruptcy, Chegg Stocks Rise on 23% Workforce Reduction, and More • IH Market News • 06/18/2024 11:02:13 AM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/17/2024 09:06:07 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/17/2024 09:00:47 PM
- NVIDIA Announces Omniverse Microservices to Supercharge Physical AI • GlobeNewswire Inc. • 06/17/2024 01:00:00 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/14/2024 08:51:55 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/14/2024 08:29:57 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/13/2024 09:52:15 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/13/2024 08:39:28 PM
- NVIDIA Stockholder Meeting Set for June 26; Individuals Can Participate Online • GlobeNewswire Inc. • 06/12/2024 09:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/10/2024 08:55:57 PM
- Apple Showcases AI at WWDC 2024, Nvidia Stock Split Starts Today, and More News • IH Market News • 06/10/2024 11:29:44 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/07/2024 09:15:17 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/07/2024 09:14:22 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/07/2024 09:12:44 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 06/07/2024 08:19:34 PM
Last Shot Hydration Drink Announced as Official Sponsor of Red River Athletic Conference • EQLB • Jun 20, 2024 2:38 PM
ATWEC Announces Major Acquisition and Lays Out Strategic Growth Plans • ATWT • Jun 20, 2024 7:09 AM
North Bay Resources Announces Composite Assays of 0.53 and 0.44 Troy Ounces per Ton Gold in Trenches B + C at Fran Gold, British Columbia • NBRI • Jun 18, 2024 9:18 AM
VAYK Assembling New Management Team for $64 Billion Domestic Market • VAYK • Jun 18, 2024 9:00 AM
Fifty 1 Labs, Inc Announces Acquisition of Drago Knives, LLC • CAFI • Jun 18, 2024 8:45 AM
Hydromer Announces Attainment of ISO 13485 Certification • HYDI • Jun 17, 2024 9:22 AM