Nvidia Corporation shares dipped on Friday after Wedbush downgraded the stock, despite the firm's price objective increasing to $300 from $220.
Analyst Matt Bryson cut Nvidia shares from outperform to neutral, citing the company's current valuation as the cause for the reduction, with the stock currently selling at 55 times his 2024 estimates.
"On the other hand, if we continue to utilize a 40X multiple to value NVDA, we would have to roughly double our sales growth expectations (from 20% to 40%) over the next couple of years," Bryson told investors.
However, the analyst believes that Nvidia will beat expectations when it announces earnings next week due to "record demand" for data center and client services and that there is no "negative catalyst" for the stock because the fundamentals are improving.
"Conditions have only improved in recent months," the analyst noted, "raising the possibility that our future predictions will be based on higher statistics." He believes that the stock's 50% rise from the last results period makes an outperform rating difficult to explain at this time.