I am confused, to put it mildly. I just read that Buckingham Reasearch has downgraded NVDA from a strong buy to accumulate. Why ???????????????? It has so much good stuff going for it. I don't understand this at all. (May 24, 2001)
Questioning an analyst? Well . . . . good for you! It was downgraded from strong buy to accumulate. We were looking for why, but did not get the full scoop. Most likely: valuation as the stock flirts with new high territory again after beating the street, reporting a 41% increase in net income and a 62% increase in revenues. It also reaffirmed 2002 at 50% revenue growth and 2003 at 40%. Those are solid numbers. Moreover, it is being added to the Nasdaq 100. But, there is that new high. To many analysts that is a sign of trouble. We know a good pattern and a new high are not bad things. NVDA sold down Wednesday after trading up most of the session; it hit a new high on the good news and then suffered at the end with the selling. Note today, however, how the stock tested the 10 day MVA and then bounced up on still above average volume for a nice gain. Leaders shake off downgrades based on valuation. NVDA was one of the first leaders in this recovery. We want to see it continue to perform well, stepping to new highs, pulling back to support in the form of the 18 day MVA or recent trendline as it did two weeks ago, and moving up from there. Leaders are targets for analysts; the strong ones will pullback but then shake it off.
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