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The Sell-Side View On Advanced Micro Devices' Analyst Day

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The Sell-Side View On Advanced Micro Devices' Analyst Day
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Advanced Micro Devices, Inc. (NASDAQ: AMD) shares are down 8.4 percent Wednesday after investors were disappointed with the company’s Analyst Day event after the close Tuesday. Several Wall Street analysts have commented on AMD following the event. Here’s a look at key themes they discussed.

Competition Heats Up

Competition from rivals NVIDIA Corporation (NASDAQ: NVDA) and Intel Corporation (NASDAQ: INTC) will serve as an earnings headwind for AMD in coming years, said Deutsche Bank analyst Ross Seymore.

“While we are encouraged by AMD’s new product launch execution and its willingness to invest in a long-term roadmap, we note the competitive response from INTC/NVDA is always a risk, making EPS growth driven by AMD’s mix/ASPs/GM significantly more difficult,” Seymore said.

Disappointing Guidance

The market was clearly not impressed by management’s long-term earnings guidance, but the conservative outlook sets a low bar for future updates.

“While there is likely going to be some disappointment with the $0.75 EPS target the company laid out for the longer term (2020), our sense is that the company is not going over its skis and [is] trying to set a target that seems more reasonable at this stage,” BMO Capital Markets analyst Ambrish Srivastova said in a note.

Uncertain Markets

Still, reliance on high-end products such as Ryzen, Vega and Naples to drive growth is a risky proposition.

“We view these products as addressing essentially new markets for AMD,” Oppenheimer analyst Rick Shafer said in a note. “Given uncertain demand, particularly for Vega and Naples, we remain in wait-and-see mode before modeling significant sustainable profitability.”

No Intel Deal

Finally, investors were disappointed that AMD management made no mention of a potential GPU licensing deal that had been reported by Fudzilla on Tuesday.

Related Link: Intel Has Reportedly Ditched Nvidia For Advanced Micro Devices

“We believe with Intel having 106,000 employees vs. AMD’s 8,200 (as of December 2016) and rights in perpetuity (i.e. forever) to use every one of Nvidia’s GPU patents up to January 2017 that Intel does not need AMD’s GPU IP and think it’s very unlikely Intel will strike a licensing deal with AMD,” Loop Capital analyst Betsy Van Hees said in a note.

Overall, Wall Street remains on the fence about AMD stock:

  • Oppenheimer maintains a Perform rating.
  • BMO maintains an Outperform rating and $15 price target.
  • Loop Capital has downgraded AMD from Buy to Hold but maintains its $13 price target.
  • Deutsche Bank maintains a Hold rating and $10 price target.

Related link:

AMD Downgraded, Analyst Thinks Intel Deal Is 'Unlikely'

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Image Credit: By Rico Shen, CC BY-SA 4.0-3.0-2.5-2.0-1.0, via Wikimedia Commons

Latest Ratings for AMD

DateFirmActionFromTo
Oct 2017BarclaysMaintainsUnderweight
Jul 2017BairdInitiates Coverage OnOutperform
Jul 2017BMO CapitalDowngradesOutperformMarket Perform

View More Analyst Ratings for AMD
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas News Downgrades Reiteration Events Analyst Ratings Tech Best of Benzinga

 

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