Advanced Micro Devices Plummets Following Q1 Earnings: What Are Analysts Saying?

Advanced Micro Devices, Inc. AMD's earnings report on Monday sent shares plunging more than 17 percent on Tuesday. Here is a summary of what some of Wall Street's top analysts are saying after the print.

Barclays: Company Needs To Smash Estimates

Barclays' Blayne Curtis rates AMD at Equal Weight with a $9 price target.

According to Curtis, AMD's in-line first quarter and a slight beat in its second-quarter guidance isn't enough to satisfy investors. Specifically, the hopes for Naples "likely extend" the ongoing debate among bulls and bears, but the analyst feels that the company needs to start raising its guidance "materially" this year given its valuation.

Curtis did note initial sales from Ryzen were a "bright spot" in the quarter; after just one month of contribution, it demonstrated a positive impact on average selling price in the quarter.

But at the end of the day, AMD's stock is "baking in a great deal" of success from Ryzen, Vega and Naples, and the company needs to deliver bigger earnings beats to keep investors happy.

UBS: AMD Is A Show-Me Story

UBS's Stephen Chin rates AMD with a Sell rating and $9 price target.

According to Chin, AMD needs to "invest heavily" in its business to keep up wit rivals and to support the stock's high multiple.

The analyst did acknowledge the company has shown a good ramp of sales of Ryzen chips in the first quarter, but investors still need to wait and see if any positive momentum can withstand competitive responses from rivals throughout the bottom half of 2017.

Also, while AMD highlighted a successful launch of its Vega graphics chip, the analyst also thinks investors need to wait and see if it can gain market share before rushing to buy the stock.

Overall, Chin views AMD's new products positively, but AMD is a show-me story; the company needs to demonstrate higher sales growth in the bottom half of 2017 with its Ryzen PC chip and Vega graphics chip to offset rising operating expenditure investments.

Loop Capital: Mistake To Sell Ahead Of Analyst Day

Betsy Van Hees of Loop Capital maintains a Buy rating on AMD's stock with a price target boosted from $12 to $13.

Van Hees highlighted a prior report from earlier this year in which she suggested that AMD's stock is priced for perfection and the company needs to execute flawlessly moving forward. While Tuesday's 17-percent plunge serves as a sign that the analyst's "concerns were warranted," now is not necessarily the time to throw in the towel.

Van Hees sees three potential catalysts to support the stock coming from the company's analyst day on May 16, including: 1) a path toward improving gross margins, 2) clear signs Naples is performing well in services and 3) the upcoming ramp of Ryzen and Vega.

BMO: Stay Patient

Ambrish Srivastava of BMO Capital Markets rates AMD's stock with an Outperform rating and $15 price target.

According to Srivastava, many investors are likely saying, "Here we go again, same ol' AMD," but patience is required for the longer-term story to play out. Working in the company's favor is the fact that next quarter will see some improvements, including a favorable working capital change.

The analyst also argued AMD's report indicates the company's road map toward a recovery remains on track. Overall, it takes some faith to believe in the company's prospects, which will soon "manifest itself into the numbers" and generate earnings power for the stock.

Elsewhere On The Street

• Analysts at Wells Fargo rate AMD's stock with an Outperform rating and $13 to $15 valuation range.
• Analysts at Oppenheimer rate AMD's stock with a Perform rating.
• Analysts at Bernstein rate AMD's stock with a Market-Perform rating and $8 price target.

Related Links:

Advanced Micro Devices Blasted After Q1 Sales Miss

Benzinga's Top Upgrades, Downgrades For May 2, 2017

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