AMD's First Analyst Day In 3 Years Leaves Street Impressed With Product Roadmap, 'Sustaining Momentum'

Two Advanced Micro Devices, Inc. AMD analysts came away confident about the semiconductor company's fundamentals following its financial analyst day Thursday.  

The AMD Analysts

Deutsche Bank Securities analyst Ross Seymore maintained a Hold rating on AMD shares and increased the price target from $42 to $50.

Credit Suisse analyst John Pitzer maintained a Neutral rating and $33 price target.

Deutsche Bank: AMD's Roadmap, Financial Goals Impressive

AMD's first analyst meeting in three years conveyed a very confident growth plan focusing on market share gains across each of its CPU/GPU-enabled markets, Deutsche Bank analyst Seymore said in a note.

The company has also set strong financial goals, the analyst said: a 20% revenue compounded annual growth rate and 25% gross margin by 2023. 

AMD's superb execution over the last few years lends credibility to its ability to achieve the financial targets, he said. 

AMD did not talk of any significant impact from the coronavirus outbreak, merely suggesting revenue could come in at the low end of its guidance of $1.75 billion to $1.85 billion for the first quarter.

The end result of the financial goals is about $2.50 in EPS, which is largely in line with expectations and is reflected in AMD's stock price, Seymore said.

Deutsche Bank said it is impressed by the company's roadmap and financial goals.

The firm is staying on the sidelines given that AMD has a full valuation and faces competition that is likely to act as a pushback to its attempt to take a 20% share of its total addressable market, the analyst said. 

See also: AMD Analysts Discuss Server, Data Center Strength And Conservative Guidance

AMD's ‘Sustaining Momentum' Was Event's Takeaway, Says Credit Cuisse 

The EPS of $2.60 suggested by AMD's new financial model is below the more bullish expectation of $3, but better-than-expected revenues and gross margins are important, Credit Suisse analyst Pitzer said in a note. 

The new model implied unit share of 25% each for server processors and PC chips and about 32% for GPU, the analyst said. 

The analyst said the clear tone of the AMD event was "sustaining momentum."

Credit Suisse commended the company for its operating expenditure growth target of 77% from $2.1 billion in 2019 to $3.71 billion in 2023.

This is a key element for sustainability with respect to silicon development, software optimization and building new channels, especially around artificial intelligence and machine learning, Pitzer said. 

The analyst day was a clear positive, 

Credit Suisse views the Analyst Day as a clear positive, and it continues to be very bullish on the overall compute total addressable market, Pitzer said, adding that the stock is more fairly valued than cheap.

The AMD Price Action

The stock was up 1% at $48.59 at the close Friday. 

Related Link: What To Expect From AMD's Analyst Day