What To Expect In AMD's Q4 Earnings Report

Shares of Advanced Micro Devices, Inc. AMD have already gained nearly 30 percent in 2018 and the company's Q4 earnings report Tuesday afternoon could result in an acceleration in the stock's advance or put a pause to the momentum.

Consensus analyst estimates for EPS stand at 5 cents, with sales coming in at about $1.4 billion. Here's a look at what a few analysts are saying ahead of the print.

GPU, Crypto Demand In Focus

Deutsche Bank's Ross Seymore maintains a Hold rating on AMD's stock with a $12 price target.

The analyst's revenue estimate of $1.46 billion implies a decline of 11 percent quarter-over-quarter and comes in slightly above the company's own guidance for a decline of 12 to 18 percent.

AMD likely benefited in the quarter from strong cryptocurrency-related GPU demand amid higher Ethereum prices, Seymore said in a note. This should generate 14 percent quarter-over-quarter growth in Computer and Graphics revenue to $933 million, which marks an acceleration from 9 percent growth in the prior quarter. AMD's semi-custom segment, EESC, likely saw a 37 percent quarter-over-quarter decrease in revenue to $523 million due to seasonality in game consoles.

AMD continues to execute well on new product ramps, including Ryzen, Vega, and EPYC, which already resulted in some share gains, the analyst said. The stock's valuation, however, is already trading at a P/E multiple of 27 times Seymore's 2018 EPS estimate of 48 cents per share, which is above the Street's consensus estimate of 35 cents per share. As such, the stock's current valuation is already "fully valued."

Related Link: AMD Bear Admits Q4 Earnings Upside Is Likely On Cryptocurrency Strength

Morgan Stanley Remains Underweight

Morgan Stanley's Joseph Moore maintains an Underweight rating on AMD's stock with an $8 price target.

Moore expects AMD to earn 9 cents per share on revenue of $1.549 billion. This implies the company will report "substantial upside" in the quarter due to ongoing strength in demand for cryptocurrency mining-related technologies. This sets up a scenario where the earnings report will act as a positive catalyst for the stock, but investors shouldn't expect the cryptocurrency catalyst, especially Ethereum, to play out over the longer-term.

AMD has made "substantial progress" with its ZEN architecture and could result in an incremental $1.3 billion in revenue throughout 2018, Moore said. The stock's current valuation likely implies an even higher revenue gain and/or a longer multiyear runway for ZEN. As such, investors may want to continue taking a "cautious" stance at current levels.

Related Link: Intel's Earnings Beat: The Sell-Side Weighs In

Encouraging Quarter, Concerning Valuation

Longbow Research's Mike Burton maintains a Neutral rating on AMD's stock with no assigned price target.

Burton said AMD likely benefited from computing trends that were better than seasonal, better pricing in Graphics cards, and "constructive" ramps in new products and architectures.

The is currently trading at 39 times the Street's consensus estimate of 33 cents per share for calendar year 2018, which is a premium to the semiconductor group, Moore said. While AMD's stock should command a higher valuation given its growth opportunities, most of the recent financial and product execution are already priced into the stock.