FBR Capital Impressed by Advanced Micro Devices Transition Story, Maintains Buy and Raises PT

In a report published Monday, FBR Capital Markets & Co. analyst Christopher Rolland maintained an Outperform rating on shares of Advanced Micro Devices, Inc. AMD and raised the price target from $5.50 to $6.00 following first quarter 2014 results. Advanced Micro Devices reported better-than-expected first quarter 2014 results on April 17. The company reported first quarter EPS of $0.02 versus the estimated $0.00, up 115 percent from the same quarter last year. Revenue came in at $1.40 billion versus the estimated $1.34 billion. Advanced Micro Devices sales were up 28 percent year-over-year. Management improved 2014 PC unit guidance from a decline of 10 percent or more to a decline of seven to ten percent. Rolland commented, “We believe Advanced Micro Devices' “under the radar” transition story is a key driver of value, although potentially messy. While structural PC headwinds are discouraging, we believe that AMD's non-PC segments will more than replace lost PC revenue over the next few years. Excluding another severe macro downturn, cash levels are now more than sufficient and net debt should be worked down for at least the next few years. In our view, the company has wisely directed its strategic focus away from the core PC market and toward gaming APUs, microservers, and custom- embedded processors, areas its larger competitor is less focused on.” Shares of Advanced Micro Devices closed at $3.69 on Thursday. The stock shot up more than 13.82 percent to $4.20 following the company reported upbeat earnings and issued strong second quarter guidance.