AMD Drops On Mixed Quarter, Analysts Weigh In

Advanced Micro Devices, Inc. AMD shares dropped more than 8% Wednesday after the company reported a mixed second quarter on Tuesday.

Despite slightly beating consensus analyst estimates, AMD reported a 13% drop in revenue in the quarter. AMD management said semi-custom product revenue and graphics channel sales were particularly weak.

Given the stock was up more than 80% year to date prior to the earnings report, traders were quick to take profits following the lackluster report. Several analysts have weighed in on whether or not investors should be buying the AMD earnings dip. Here’s a sampling of what they’ve had to say.

Voices From The Street

CFRA analyst Angelo Zino said AMD’s 7nm Ryzen processors and Radeon GPUs will be big hits this holiday season.

“We anticipate strong market share gains over the next 12 months on the data center server side, supported by a significantly faster ramp of 7nm processors,” Zino wrote in a note.

Morningstar analyst Abhinav Davuluri said second-quarter numbers were mostly in-line with expectations, but guidance was a bit disappointing.

“We note many of the growth drivers for AMD remain in the very early stages of launch, and we suspect the firm will still attain top-line growth north of 40% in the second half versus first half of 2019,” Davuluri wrote.

Bank of America analyst Vivek Arya said AMD still offers investors a rare combination of a strong pipeline, massive, high-growth end-markets and market share gains.

“While Intel (INTC) and Nvidia (NVDA) are tough competitors, we believe the size of the TAM and AMD’s execution can drive an industry leading 15-20%+ sales and 35-40% EPS growth trajectory,” Arya wrote.

Ratings And Price Targets

• CFRA has a Hold rating and $35 target.
• Morningstar has a Sell rating and $19 fair value estimate.
• Bank of America has a Buy rating and $40 target.

AMD's stock traded lower by 8.3% to $31.07 at time of publication.

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