Citi cuts Nvidia target again as board weighs Huang’s fate

Citigroup lowered its price target on Nvidia ↗ 2.87% to $225 from $285 on Thursday, November 12. It was the bank's second cut in three days, as Wall Street weighs whether CEO Jensen Huang will stay at the company. Citi analysts disclosed the new target in an overnight note, CNBC reported, as investors waited to hear whether Nvidia's board would remove Huang. Most of the Street still favors the stock. Analysts polled by FactSet give Nvidia an average buy rating and a mean price target of $317.19, according to MT Newswires.cnbc.com+1

Leadership worries drive the cut

"If Jensen were forced out, it would mark the end of an era," Citi analysts Atif Malik and Sylla wrote, per CNBC. They added that "a leadership transition creates an overhang on the stock given his central role in strategy, product vision, customer relationships, and investor confidence." They also said Chief Financial Officer Colette Kress could serve as interim CEO while the board looks at outside candidates.cnbc.com

The cut came after The New York Times ↗ 0.17% reported on Wednesday that Huang had a second extramarital affair, this time with an employee. Huang was already under scrutiny for admitting to a relationship with a woman U.S. intelligence believes is a Chinese spy. CNBC confirmed late Wednesday that the board was meeting to decide whether to oust him, the outlet reported. Nvidia shares fell on Monday and Tuesday, recovered some ground on Wednesday, and were lower again in Thursday premarket trading.cnbc.com

A wave of target cuts

Citi cut its target from $315 to $285 on November 10 and kept its Buy rating. At the time, Malik called the board-led investigation into Huang's conduct "an overhang" that could overshadow the company's results, Investor's Business Daily reported. Several other firms have also stepped back. Baird downgraded Nvidia to Neutral and cut its target to $200 from $500, citing poor visibility into 2027 data center demand and uncertainty over the CEO's tenure, Investing.com reported via Yahoo Finance. Morgan Stanley removed Nvidia as a Top Pick but kept its Overweight rating, the same report said.au.finance.yahoo.com+1

Wedbush's Dan Ives said he values Nvidia at "$300 per share with Jensen as CEO and $225 per share without Jensen as CEO," CNBC reported. That matches Citi's new target.cnbc.com

Earnings ahead

Nvidia is scheduled to report its fiscal third-quarter results on November 17, according to Business Insider. Before the leadership news grew, Malik had expected a modest earnings beat. He also warned that higher prices for high-bandwidth memory could weigh on gross margins, Yahoo Finance reported. Ives called the moment "a dark day for Nvidia" but said the company "will navigate this turmoil and get through to the other side," CNBC reported.uk.finance.yahoo.com+2