Analysts Weigh In On AMD Following Q2 Earnings Beat

Advanced Micro Devices, Inc.AMD shares are up more than 11 percent Thursday after the company’s second-quarter earnings report topped lofty market expectations.
A number of Wall Street analysts weighed in following the release.

Voices From The Street

KeyBanc analyst Michael McConnell said strong CPU sales numbers more than offset GOU weakness from the cryptocurrency market.

“New EPYC server design wins at cloud customers, coupled with 10nm manufacturing delays at Intel, have the potential to position company fundamentals favorably in 2019,” McConnell wrote in a note.

Morgan Stanley analyst Joseph Moore said third-quarter guidance was lower than expected and there are persistent headwinds for the graphics business.

“Even with a ramp to 10% server share by end of 2019, we still see limited upside,” Moore wrote.

Stifel analyst Kevin Cassidy said AMD management is executing its plan perfectly, and new CPU and GPU products will help AMD expand margins in 2019.

“This product roadmap visibility is a key ingredient to AMD's market share gains over the next few years,” Cassidy wrote.

Credit Suisse analyst John Pitzer says cryptocurrency market risk is steadily being removed from AMD’s outlook, and the company’s long-term growth narrative remains intact.

“While Bulls will argue for $1.50-$2.00 plus of LT EPS, we are more comfortable estimating $0.75-$1.00 – reflecting likely higher spending levels to support future growth, a better than prior but still sub-optimal WSA, and potential competitive response should share momentum accelerate,” Pitzer wrote.

Ratings And Price Targets

• Despite the big quarter, Wall Street remains mixed on the outlook for AMD stock given its current valuation:
• KeyBanc has a Sector Perform rating and no target.
• Morgan Stanley has an Underweight rating and $11 target.
• Stifel has a Buy rating and $21 target.
• Credit Suisse has a Neutral rating and $13.50 target.

At time of publication, AMD's stock was trading around $18 a share.

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