Advanced Micro Devices, Inc. AMD is scheduled to report first-quarter results after Wednesday's close that could come in ahead of consensus estimates, according to Credit Suisse.
The Analyst
Credit Suisse's John Pitzer maintains a Neutral rating on AMD's stock with an unchanged $13.50 price target.
The Thesis
Pitzer is modeling AMD to report the following in its Q1 print:
- Revenue of $1.75 billion and EPS of 12 cents versus consensus estimates of $1.55 billion and 8 cents per share.
- Cryptocurrency-related revenue likely drove $150 to $200 million of upside to revenue estimates.
- Client MPU revenue likely rose 5 percent quarter-over-quarter, driven by flat unit growth in Ryzen and a 5-percent increase in average selling price.
- Enterprise, embedded and semi-custom revenue likely rose 40 percent from the prior quarter, in-line with new seasonality trends.
- Interest, taxes and other expenses of $30 million.
- Management is likely to guide its second-quarter revenue and EPS to be in-line with the Street's current estimate of $1.59 billion and 10 cents per share.
Despite expectations for a positive Q1 result, the analyst said upside to estimates over the near-term are not sustainable for the following reasons:
- Ongoing price volatility in cryptocurrencies that make mining less economical.
- Competing products are set to be introduced to the market like Bitmain's Ethereum ASIC.
- Margin benefits from Ryzen are in "mid to later innings."
- Momentum in Epyc likely peaked four months ago.
Price Action
AMD shares were trading up 0.25 percent at $10 at the time of publication Monday afternoon.
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