\When the new Portfolio Grader ratings were updated over the weekend, NVIDIA (NVDA) fell to a D-rating.
Dear Sheryl,
When the new Portfolio Grader ratings were updated over the weekend, NVIDIA (NVDA) fell to a D-rating. However, rather than selling it outright, I want you to continue to hold NVDA in the High-Growth Investments Buy List. As you know, NVIDIA released third-quarter earnings and sales results last week. The company reported 21% annual sales growth of $3.18 billion, which fell short of analysts' estimates for $3.24 billion. Third-quarter earnings per share jumped 48% year-over-year to $1.97. Adjusted earnings per share were $1.84, topping estimates for $1.71. While the sales miss was disappointing, what really hit the stock last week was weaker-than-expected guidance. NVIDIA expects fourth-quarter revenue of $2.7 billion, well below the consensus estimate for $3.4 billion. As a result, analysts have lowered their revenue and earnings guidance for the fourth quarter in the past week-and that's why the stock slipped to a D-rating over the weekend. Now, NVIDIA is still a fundamentally strong company that continues to reward shareholders with a generous dividend. And it also recently authorized a new $7 billion share repurchase program. All of which should help support the stock in the coming weeks. So, for these reasons, I recommend that we continue to hold NVDA. I do expect the stock to rebound strongly from its post-earnings dip. When that happens, we'll reevaluate the stock and may look to sell our shares into strength. For now, continue to hold NVDA. Sincerely, Louis Navellier
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