Morgan Stanley Sees Continued Challenges for Advanced Micro Devices

In a report published Friday, Morgan Stanley analyst Joseph Moore reiterated an Underweight rating and $2.50 price target on

. In the report, Morgan Stanley noted, “AMD remains in a tough position. The computing business has declined 10%-20%+ y/y for ten straight quarters,and we think unit shipments into consoles are unlikely to grow much from this year's 19 mm units (our estimate), with modest price declines next year. The company continues to cut R&D to maintain profitability; but is $1 bn run-rate adequate to compete in microprocessors vs. Intel's $11 bn,and in graphics vs. NVIDIA's $1.4 bn, in addition to ARM-based server and semi-custom initiatives? AMD has executed well on product pipelines so far and has still struggled. The stock is approaching our $2.50 price target (based on SOTP), but our sense is that it remains under pressure near term, hence our Underweight.” Advanced Micro Devices closed on Thursday at $2.64.