What AMD Analysts Expect From The Chipmaker's Q1 Report

With Intel Corporation INTC reporting strong first-quarter results, the Street's focus now turns to its peer Advanced Micro Devices, Inc. AMD, which is scheduled to release its financial results Tuesday after the close.

The AMD Analysts

Credit Suisse analyst John Pitzer maintained a Neutral rating on AMD with a $33 price target.

BofA Securities analyst Vivek Arya maintained a Buy rating and $62 price target.

Morgan Stanley analyst Joseph Moore maintained an Equal-Weight rating and $42 price target.

AMD Shares 'More Fairly Valued Than Cheap,' Credit Suisse Says 

AMD is likely to report in-line first-quarter results and issue in-line second-quarter guidance, with a slight upward bias, Credit Suisse analyst Pitzer said. The analyst expects first-quarter revenue and earnings per share, or EPS, of $1.8 billion and 19 cents, respectively, in line with the consensus.

The Computing & Graphics segment could contribute $1.4 billion to the top-line, suggesting a modest decline, in line with seasonal trends, and the Enterprise, Embedded and Semi-custom, or EESC, segment, could add $385 million, he said. 

Work-from-home, study-from-home and everything shifting online has created a capacity need, which is likely benefit AMD, Pitzer said.

Yet the analyst said activity around qualifying new vendors in Enterprise, Cloud, and Data Center have slowed during shelter-in-place.

AMD is also likely to benefit from second-quarter PC restocking, especially in the consumer channel, he said. 

AMD has solid product cycles in Gaming and share gains in Server to support maintaining its 2020 guidance, Pitzer said. 

"Despite being more insulated to NT COVID risks than most Semis (+7% YTD vs SOX -16%), and a key beneficiary of our expanding Compute TAM thesis, we still view AMD shares as more fairly valued than cheap as the stock." 

See also: AMD To Donate $15M Worth Of Computing Systems To Accelerate COVID-19 Medical Research

Tempered Guidance From AMD Could Still Be Impressive, BofA Says 

BofA is bracing for a first-quarter beat and in-line second-quarter guidance, analyst Arya said. The focus is on the sustainability of the company's prior 2020 sales and gross margin outlook, the analyst said. 

AMD could retract guidance even while qualitatively supporting sales growth guidance of 20%-plus, he said. 

The key is executing on its new server design wins, and the rollout of new consoles remaining on track for holiday season, Arya said.

The analyst expects an in-line 45% gross margin, with a path toward a 50% margin in the long term. He also highlighted the company's improved balance sheet, which boasts of $1.1 billion in cash, the highest in over 10 years.

AMD Needs To Show Progress On New Initiatives, Morgan Stanley Says 

The PC market in the U.S. and Europe has picked up significantly around work-from-home drivers, fortifying expectations that AMD's actual results could come in higher, Morgan Stanley analyst Moore said.

The analyst also expects the server business to remain strong, driven more by specific EPYC adoption and to some extent by the surge in the cloud ecosystem.

Moore said he thinks the company is tracking to its server targets of double-digit market share by mid-2020. The analyst expects the company to say its 7nm Milan product will ship late this year but sees some risk to any new product timing.

At its current lofty valuations, AMD will need to show progress in some of the newer initiatives — particularly data center GPU with CDNA 1 — to drive the stock higher, rather than solid ongoing results, according to Morgan Stanley. 

The firm estimates March quarter revenue of $1.752 billion, slightly below the consensus estimate and EPS of 17 cents. It models below-consensus revenue of $1.882 billion for the second quarter and EPS of 21 cents, in line with the Street.

AMD Price Action

AMD shares were trading 0.87% higher at $56.67 at the time of publication Monday.