Wedbush Downgrades Advanced Micro Devices On CEO News; Stock Falls 10%

Wedbush downgraded Advanced Micro Devices, Inc. AMD in a report issued Wednesday from Outperform to Neutral and lowered its Price Target from $6 to $3.

The downgrade came after AMD announced the Rory Read had stepped down as President and CEO and Dr. Lisa Su had been appointed as his replacement.

Analyst Betsy Van Hees believed that “Dr. Su is the right person to lead AMD and view her appointment as a significant positive for AMD, the timing of her appointment seems rushed since AMD will report Q3 earnings next Thursday...and both Dr. Su and Mr. Read are still negotiating their respective compensation packages.”

The report expressed worry that this news “is a sign that AMD’s turnaround may be taking longer than anticipated and that the weakness in consumer PC may cause Q4 guide to fall short of expectations.”   

Van Hees concluded that “given the challenges in AMD’s primary end markets, and seeming unplanned timing of [Dr. Su’s] promotion, we think the prudent place to be at this time is on the sidelines.”

Wedbush noted that Q4 will like be guided down, “hampered by lower semi custom console shipments and our industry checks indicating that the consumer PC market remains challenged. We are lowering our Q4 revenue and EPS estimates to $1.44B (from $1.49B) and $0.04 (from $0.08), respectively, below the Street ($0.05/$1.49B).”

Advanced Micro Devices, Inc. recently traded at $2.95, down 9.91 percent.