The demise of the PC gaming business has put pressure on chip goliath Nvidia (NVDA). The company’s fiscal fourth quarter saw a year-over-year decline in revenue and profitability, but it outperformed Wall Street forecasts thanks to higher data center revenue.
Investors applauded Nvidia’s first-quarter sales forecast and CEO Jensen Huang’s statement on how well-positioned the business is to take advantage of growing interest in generative AI (AI).
With the aid of increased AI spending, Jefferies analyst Mark Lipacis anticipates that Nvidia’s data center revenue would reaccelerate year over year after the first quarter, increasing by 28% in 2023 and 30% in 2024. (See TipRanks’ stock chart for Nvidia.)
Ross stores (rust) delivered positive results for the fourth quarter of fiscal 2022 as the off-price retailer’s good-value offerings continued to attract customers. However, the company issued a conservative guidance for fiscal 2023 due to the impact of high inflation on its low- to middle-income customers.
Following the results, Guggenheim analyst Robert Drbul, ranked 306th among analysts on TipRanks, lowered his estimate of fiscal 2023 earnings per share for Ross Stores to reflect the impact of ongoing macroeconomic headwinds.
Still, he expects Ross Stores’ earnings to return to double-digit growth in fiscal 2023, driven by higher operating margin, accelerated new store openings and the company’s share buyback program.
Drbul reiterated a buy rating on Ross Stores and a price target of $125, citing “the favorable environment for the company given a greater supply of branded items in the marketplace, a stronger value proposition and a broader assortment compared to pandemic levels.”
Drbul has provided profitable ratings 63% of the time, and its ratings have generated an average return of 9.1%. (See Ross Stores Hedge Fund Trading Activity on TipRanks)
Next on our list is another consumer discretionary company – Kontoor Brands (KTB), which owns the iconic Wrangler and Lee brands. The apparel company’s shares rebounded on the day it reported solid fourth-quarter results and provided a strong outlook for 2023.
Williams Trading analyst Sam Poser noted that demand for Wrangler and Lee continues to grow, driven by the company’s brand strengthening initiatives. Additionally, he believes Kontoor’s outlook for fiscal 2023 “is likely to prove conservative.” He expects the company’s revenue growth in China to turn positive in the second quarter and sequentially accelerate thereafter.
Poser raised its earnings per share estimates for fiscal years 2023 and 2024, reiterated its buy rating on Kontoor Brands, and raised its price target to $60 from $53. (See Kontoor Brands insider trading activity on TipRanks)
“The combination of better-than-expected Q4 22 results led by a 20% increase in US DTC [direct-to-consumer] Revenues, continued improvements in the positioning of both Wrangler & Lee brands, and reasonable forecasts indicate continued improvements in KTB’s consumer-centric capabilities and its overall operations,” said Poser.
Poser ranks 134th among analysts tracked by TipRanks. Additionally, 55% of its reviews were successful, yielding an average return of 17.7%.