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Williams Financial Claims Other Analysts Overlooked Advanced Micro Devices' Upside

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Williams Financial analyst Cody Acree maintains his bullish view on Advanced Micro Devices, Inc (NYSE: AMD) after a hit to shares following Q3 results.

This morning, Bank of America and Merrill Lynch downgraded their Buy rating to Neutral. Citigroup and Bernstein lowered their price target on Advanced Micro Devices. Shares of AMD are getting destroyed following the reports and are currently trading at -12.47%.

Citigroup noted, “While AMD's revenue and EPS results/guidance were above consensus, investors are unlikely to be impressed, presumably because a more substantial beat was expected in light of AMD's new gaming momentum. Indeed, AMD's graphics revenues (including gaming) grew 110% q/q, reaching a record proportion of sales (46%). But with PC revenues down an estimated 7.6% (vs. Intel up 3.5%), AMD lost 80bps of PC related market share, offsetting gaming. With momentum now seasonally slowing, we find little reason to become excited about AMD at this time.”

Bernstein commented on disappointments in the note writing, "the core business was under significant pressure in the quarter, with MPU revenues down 6% driven by decreased unit volumes with flat overall ASPs; given mix shift toward Desktop however, ASPs within categories declined (again). Graphics were up >100% QoQ driven by game console revenues; but the core GPU business declined as AMD is in the middle of a product transition."

Acree suggested that these analysts have overlooked revenue growth and profitability upside, as AMD is "aggressively" managing expenses to show their ability to maintain a stable cash balance. The bullish analyst said that investors are "overlooking that AMD is delivering on efforts to become less dependent on PCs (30%+ total rev. from embedded products), helping to drive more predictable profits."

Advanced Micro Devices closed at $4.09 on Thursday.

Posted-In: Bank of America Bernstein Citigroup Cody Acree Merril Lynch Williams FinancialAnalyst Color Analyst Ratings


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