Advanced Micro Devices Shares Are Crashing After-Hours On Nasty Guidance
Advanced Micro Devices, Inc. (NASDAQ: AMD) shares are down more than 12 percent in the after-hours session after dropping by over 2.5 percent during Monday's trading.
The reason? AMD reported guidance that can only be described as nasty: Second quarter gross margin expectations of 28 percent versus a previously guided 32 percent, along with a year-over-year sales decline of 8 percent (5 percentage points lower than previous expectations).
The semiconductor mid-cap is expected to release earnings later this month. According to Estimize, Wall Street is expecting a Q2 loss of $0.10 per share. The company reported a positive two-cent EPS a year earlier.
After its previous earnings report in April, analysts were mixed on AMD. Canaccord's Matt Ramsay cut his price target to $2.00 on a "decline" in computing and graphics. Wells Fargo's David Wong, meanwhile, cut his price target range to $3.00-$3.50.
In a report published in May, Wong said this valuation range is based on 0.5 to 0.6 times his 2016 sales estimate. "We think this multiple range is reasonable given AMD's continuing losses," Wong wrote.
Among the risks he saw at that time: AMD hasn't yet stabilized its sales or cut its losses.
It appears that's still the case.
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