Cowen Raises AMD Price Target After CEO Meeting

Advanced Micro Devices, Inc. AMD crossed above $20 per share Monday for the first time in more than a decade, and one Wall Street analyst said there’s plenty more upside ahead.

The Analyst

Cowen analyst Matthew Ramsay reiterated an Outperform rating on AMD and raised the price target from $21 to $25.

The Thesis

Ramsay said he loved what he saw in AMD’s second-quarter earnings report, but it was a meeting with CEO Lisa Su that prompted the higher target price. (See the analyst's track record here.)

Su convinced Cowen that near-term risk is minimal, the analyst said.

“Overall, with cryptocurrency/blockchain now largely de-risked from the model following third-quarter guidance with 'negligible' contributions going forward in the outlook versus 10 percent of revenue as recently as the first quarter," Ramsay said. "We believe investors have turned [the] focus toward AMD's core businesses poised to benefit from substantial share gain opportunities against Intel Corporation INTC in the PC and data center CPU markets (supplemented by modest datacenter GPU gains) as 7nm products ramp later this year and more fully in 2019."

Su’s message was that the AMD boom is still in its early stages, Ramsay said, and the analyst agrees.

Investors will need to be patient and wait a few more quarters for the new 7nm products to have a meaningful impact, a trend that will likely begin in 2019, according to Cowen.

Given that the stock has more than doubled in 2018, Ramsay said investors can anticipate some near-term profit taking at some point, but the long-term bull case is solid.