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Credit Suisse: What To Expect From AMD's Upcoming Q1 Report

Credit Suisse: What To Expect From AMD's Upcoming Q1 Report
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Advanced Micro Devices, Inc. (NASDAQ: AMD) is scheduled to report first-quarter results after Wednesday's close that could come in ahead of consensus estimates, according to Credit Suisse. 

The Analyst

Credit Suisse's John Pitzer maintains a Neutral rating on AMD's stock with an unchanged $13.50 price target.

The Thesis

Pitzer is modeling AMD to report the following in its Q1 print: 

  • Revenue of $1.75 billion and EPS of 12 cents versus consensus estimates of $1.55 billion and 8 cents per share.
  • Cryptocurrency-related revenue likely drove $150 to $200 million of upside to revenue estimates.
  • Client MPU revenue likely rose 5 percent quarter-over-quarter, driven by flat unit growth in Ryzen and a 5-percent increase in average selling price.
  • Enterprise, embedded and semi-custom revenue likely rose 40 percent from the prior quarter, in-line with new seasonality trends.
  • Interest, taxes and other expenses of $30 million.
  • Management is likely to guide its second-quarter revenue and EPS to be in-line with the Street's current estimate of $1.59 billion and 10 cents per share.

Despite expectations for a positive Q1 result, the analyst said upside to estimates over the near-term are not sustainable for the following reasons:

  • Ongoing price volatility in cryptocurrencies that make mining less economical.
  • Competing products are set to be introduced to the market like Bitmain's Ethereum ASIC.
  • Margin benefits from Ryzen are in "mid to later innings."
  • Momentum in Epyc likely peaked four months ago.

Price Action

AMD shares were trading up 0.25 percent at $10 at the time of publication Monday afternoon. 

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Latest Ratings for AMD

Oct 2018BairdMaintainsNeutralNeutral
Oct 2018BMO CapitalMaintainsMarket PerformMarket Perform
Oct 2018BarclaysUpgradesUnderweightEqual-Weight

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