Morgan Stanley Maintains Underweight on Advanced Micro Devices, $2.50 PT

In a report published Wednesday, Morgan Stanley analyst Joseph Moore maintained Underweight on Advanced Micro Devices AMD, with a $2.50 price target as CPUs remain troubling. According to the report, despite the short term tailwind in PC builds, AMD's computing business declined 9 percent sequentially and will likely decline again in 1Q. On the plus side, Global Foundries is not pursuing penalties over AMD not utilizing its 2013 wafer commitment, and console builds are strong into 1Q. “We estimate that AMD shipped 6.8 mm units (27 mm run rate) to the console market in 4Q, for $562 mm revenues, with total 2013 builds of 12 mm units vs. 7 mm sell in (10-12 week lead time),” the report noted. “Year 2 of the Xbox 360/PS3 cycle shipped 17.8 mm units, and despite stronger Year 1 numbers for this gen (due to higher supply and lower price points), we don't believe the TAM has expanded. We expect shipments of 18.7 mm units in 2014, below 4Q run rates. We still expect a small EPS loss in 2014.” AMD closed Tuesday at $4.17.