"NVIDIA Free Cash Flow Generation Creates New Opportunity; Maintains Buy Rating And $700 Per Share Price Target - BofA" - Investing
Portfolio Pulse from Benzinga Newsdesk
BofA analysts have maintained a Buy rating and a $700 per share price target for NVIDIA (NASDAQ:NVDA), citing the company's potential to generate approximately $100 billion in free cash flow (FCF) in CY24/25E. They believe NVIDIA's dominance in generative AI could drive this significant FCF, which could lead to both organic and inorganic growth opportunities. While they estimate $30-$35 billion could be used for buybacks, the remaining $65-$70 billion could fund new initiatives. The analysts also note NVIDIA's current trading multiple is depressed compared to its historical median, attributing this to uncertainties in CY25 growth prospects and its hardware-dependent business model. They suggest that NVIDIA's strong FCF generation provides the flexibility to address these concerns and potentially increase its trading multiple by building a recurring revenue profile.
January 05, 2024 | 4:56 pm
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POSITIVE IMPACT
BofA analysts maintain a Buy rating and $700 price target for NVIDIA, highlighting its potential to generate significant free cash flow and invest in growth, which could lead to an increased trading multiple.
The positive outlook from BofA analysts, including the maintained Buy rating and high price target, suggests a bullish sentiment for NVIDIA's stock in the short term. The emphasis on NVIDIA's free cash flow generation and potential for reinvestment in growth initiatives is likely to be viewed favorably by investors. The analysis also points to the possibility of NVIDIA's trading multiple expanding, which could further drive up the stock price. However, the confidence is not at 100 due to market variables that can affect stock prices beyond analyst ratings.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100