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Advanced Micro Devices Shares Continues To Tumble

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Advanced Micro Devices' (NYSE: AMD) disappointing outlook caused its shares to tumble on Friday afternoon.

The chip maker missed second-quarter expectations only slightly, but said it will report a loss for 2014.

Despite the stunning subsequent stock performance, Chief Executive Rory Read told investors that the second quarter "capped off a solid first half of the year" for Advanced Micro Devices.

But Morgan Stanley's Joseph Moore on Friday said only that "results were okay" for period and in stark contrast to rival Intel (NASDAQ: INTC), which recently posted a 40 percent gain in profits and an outlook that beat expectations.

Moore, who has an Underweight rating and $2.50 target on Advanced Micro Devices, said break-even in 2015 "seems like a struggle" for the company, although the Wall Street consensus sees earnings of $0.20.

Even with what Moore called "solid execution" in the second quarter, sales of central processing units "barely grew" while sales of chips for gaming consoles were below expectations.

Moore forecast "the best year" for the company's central processing unit won't come until 2018.

Credit Suisse's John Pitzer said structural headwinds now "dominate the company's fate."

Pitzer, who has an Underperform rating and $3.00 target, said the market for gaming chips is at its annual peak while in personal computer chips, Advanced Micro is over-reliant on the consumer market where rival Intel is out-competing.

Although the company's recent repositioning "the right strategy," Pitzer said "tangible milestones are becoming more difficult to achieve."

Deutsche Bank's Ross Seymore said shares of Advanced Micro "are likely to remain under pressure" given market share gains by Intel and difficulty in repeating success in its gaming chip segment.

Seymore maintained a Hold rating and cut his target to $3.50.

Advanced Micro traded recently at $3.80, down nearly 17 percent from its opening Friday.

Latest Ratings for AMD

DateFirmActionFromTo
Jul 2014Bank of AmericaDowngradesNeutralUnderperform
Jul 2014FBR CapitalDowngradesOutperformMarket Perform
Jul 2014Deutsche BankMaintainsHold

View More Analyst Ratings for AMD
View the Latest Analyst Ratings

Posted-In: Credit Suisse Deutsche Bank John Pitzer Joseph Moore Morgan Stanley Rory ReadAnalyst Color Analyst Ratings

 

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