(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Nvidia Corp.’s (NVDA) stock may be ready to rise by about 9% in the coming weeks based on technical analysis. Nvidia stock has had another solid year, with the shares soaring by over 38% on strong revenue and earnings growth driven from its gaming and data center business. 

Analysts see the shares continuing to rise as well and have been upping their price targets on the stock. On September 28, Evercore ISI raised their price target on the stock to $400 from $300, which is almost 50% higher than the stock’s closing price of $267.08 on September 27. 

NVDA Chart

NVDA data by YCharts

Technical Bounce

The technical chart shows the stock in a well-defined trading channel which has been in place since the end of January.  The stock fell to the lower end of the range to a price of around $258 on September 24. Now the stock appears to be turning higher and should it return to the upper end of the trading channel, it could rally to almost $290 about 9% higher than the stock’s closing price on September 27. (See: Nvidia's Stock May Drop 8% Over The Short-Term .)

The relative strength index (RSI) is now trending higher since bottoming in July. It would suggest that bullish momentum is returning to the stock. Volume has been below the 3-month moving average, and it may show the number of sellers is waning. 

 

 

 

Strong Growth

The fundamentals continue to look very strong based on current analysts’ estimates. The company should report results around the start of November for its fiscal third quarter of 2019. Analysts expect earnings to rise by almost 46% on about 24% revenue growth. (See: Nvidia Seen Soaring to Record on Explosive Growth.)

Since the middle of August, analysts have been increasing their long-term earnings estimates for the company. For example, analysts now see earnings in fiscal 2021 growing by over 20%, which is up from prior forecasts for earnings growth of 18%. 

NVDA EPS Estimates for Current Fiscal Year Chart

NVDA EPS Estimates for Current Fiscal Year data by YCharts

Upping Targets

Price targets on the stock have been rising as well to an average of almost $287, about 7% higher than the stock’s closing price on September 27. 

Nvidia stock has been on a fantastic run over the past three years. If the company can continue to deliver the significant earnings growth rates as it has in the past, then the shares should continue to climb over the long-term. 

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.

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