NVIDIA Corporation (NVDA) shares rose more than 3% during Monday's session after a pair of bullish analyst comments. RBC Capital raised its price target from $190 to $217 and reiterated its Outperform rating. Analyst Mitch Stevens believes that NVIDIA stock will be the best performing large-cap name in his coverage universe over the next six to nine months, citing a pick-up in gaming demand and a recovery in the data center division thanks to an anticipated product refresh.
At the same time, Evercore ISI raised its price target on NVIDIA shares from $185 to $225, citing a potential recovery coming during the second half of the year and continuing into 2020 and beyond. Analyst C.J. Muse anticipates at least 15% compound annual growth rates for gaming into 2022, driven by notebook gaming growth, without building in credit for other contributions.
Despite the bullish commentary, there are some important risks that remain for the stock. The trade war with China could continue to affect tech companies, like NVIDIA, that sell into the country's market. NVIDIA has substantial exposure to China's market, and any acceleration in tariffs could hurt the company's bottom line as it continues its recovery into the second half of 2019.
From a technical standpoint, the stock reached prior reaction highs during Monday's session. The relative strength index (RSI) is approaching overbought levels with a reading of 64.14, but the moving average convergence divergence (MACD) could see a near-term bullish crossover. These indicators suggest that the stock could have room for a breakout over the coming days.
Traders should watch for some consolidation above reaction highs of around $187.00 if the stock breaks out or below those levels if it fails to break out. A breakout could lead to an intermediate-term test of trendline resistance at around $200.00, while a breakdown could lead to a retest of the 50-day moving average at $169.73 over the coming sessions.
The author holds no position in the stock(s) mentioned except through passively managed index funds.