Advanced Micro Devices Upgraded On Near-Term Momentum, Conservative Guidance

Credit Suisse’s John W. Pitzer believes that Advanced Micro Devices, Inc. AMD could see near-term momentum over the next few quarters, which would offset several of the long term concerns regarding the lack of sale.

Pitzer upgraded the rating on the company from Underperform to Neutral while raising the price target from $5.50 to $7.00.

The analyst expects the company to witness several positive catalysts, including the guidance for CQ3 and CQ4, which appears conservative.

Conservative Guidance

Advanced Micro Devices expects PC revenue to grow seasonally during CQ3, which Pitzer believes is too low, while the company guided down CQ4 13 percent quarter-on-quarter, despite the extra week during the quarter.

Related Link: Barclays On AMD: "Turnaround Under Way, But Already Pricing In Some Success"

In addition, the analyst pointed out that recent funding “significantly improves balance sheet, liquidity, and trough valuation,” with the company having recently raised $1.3 billion to reinforce its balance sheet.

This also removes liquidity concerns, while providing downside support to the stock valuation.

Positive News Flows

“Renegotiation of WSA provides flexibility and a more credible roadmap – while Global Foundries will continue to be an important partner, AMD has obtained more flexibility to work with TSMC to provide customers with a more credible process roadmap,” Pitzer went on to say.

Advanced Micro Devices is also set to launch its Zen product in 2017, and the analyst expects positive news flow for the next few quarters, as the company launches the Server and Desktop versions during CQ2:17 and CQ3:17.

In Wednesday's pre-market, the stock was seen up 0.77 percent at $6.55.

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