Evercore ISI Downgrades NVIDIA to In Line, $186 Price Target

Evercore ISI analyst Mark Lipacis downgraded NVIDIA (NASDAQ: NVDA) from Outperform to In Line with a price target of $186.

“Expect Uncertainty to Pressure P/E. The Wall Street Journal reported Nvidia’s Board was “preparing to oust” it’s CEO after he had two extramarital affairs, including one with a suspected Chinese spy. The NY Times reported that Nvidia’s Board hired law firm Wachtell Lipton to lead an investigation into the matter.

While Nvidia’s Board said that it “has no reason to believe that either national security or Nvidia secrets were compromised,” we believe that the investigation will take time and we expect NVDA’s P/E multiple will continue to compress consistent with our “Late-Innings of the Semi Cycle” thesis, especially since Nvidia has no obvious succession plan or number 2 operational executive.

We lower our price target to $186 based on 8x our CY28 EPS estimate of $23. We use a P/E of 8x which is consistent with the decline of AAPL’s P/E from 38x to 8x between 2007 and 2012 after it posted material EPS growth post the launch of the iPhone.”

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