Citron Research has a new target for the new year: Nvidia Corporation.
“Citron readers know we have long been fans of $NVDA, but now the mkt is disregarding headwinds,” Citron tweeted.
Shares of the maker of processors for video games fell by as much as 3% on Wednesday after the tweet.
In brief, Citron said:
- Nvidia’s growth has come from its gaming division and by taking market share from competitor Advanced Micro Devices, not from new markets.
- There’s “significant competition” from several players, including AMD and Intel, which could hurt gross margin in the new year.
- Investors may be overstating the value of Nvidia’s intellectual property. A patent cross license agreement with Intel could hurt profitability in 2017.
Nvidia is the best performer on the S&P 500 this year, and is up 245% year-to-date after Wednesday’s pullback. Citron said it sees the stock heading back to $90 per share, down about 21% from current levels.
— Citron Research (@CitronResearch) December 28, 2016