Market Overview

Northland Downgrades AMD On 'Irrational Expectations'

Share:
Northland Downgrades AMD On 'Irrational Expectations'

Advanced Micro Devices, Inc. (NASDAQ: AMD) has been one of the biggest market winners of 2018, but one Wall Street analyst said Thursday that the AMD rally has finally run its course.

The Analyst

Northland Capital Markets analyst Gus Richard downgraded AMD from Outperform to Market Perform and raised the price target from $26 to $30.

The Thesis

The fundamental basis for AMD’s rally is valid, Richard said in the downgrade note. (See his track record here.)

With the stock up 208 percent year-to-date, the analyst said AMD’s market share opportunity is fully priced into the stock.

“While we expect numbers to go up, and [the] stock to continue to outperform between now and the end of the year as investors chase performance, we are downgrading shares on what we believe are irrational expectations of rate of change in financial performance." 

Richard estimates that AMD’s PC CPU output will be limited by production capacity for at least the next three quarters. While AMD has a window to gain market share from Intel Corporation (NYSE: INTC) in the server business given Intel’s well-publicized delays, Richard said AMD’s best-case scenario for 2019 PC CPU revenue is $1 billion and its best-case scenario for server revenue is $1.6 billion.

That type of growth is certainly impressive, Richard said, but with the stock already up so much, the analyst said he sees little room for additional upside — even if AMD is able to maximize its potential and generate $9.6 billion in total revenue and $1.90 in EPS in 2019.

Price Action

AMD stock was down nearly 1 percent at $31.87 at the time of publication Thursday.

Related Links:

KeyBanc Starts Coverage On 10 Semiconductor Stocks, Downgrades Cypress Semi

Bank Of America: Don't Sweat Mixed Nvidia Turing Reviews

Latest Ratings for AMD

DateFirmActionFromTo
Oct 2019UpgradesHoldBuy
Oct 2019MaintainsNeutral
Oct 2019MaintainsNeutral

View More Analyst Ratings for AMD
View the Latest Analyst Ratings

Posted-In: Gus Richard Northland Capital marketsAnalyst Color Downgrades Price Target Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (INTC + AMD)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MTDRWells FargoMaintains28.0
MROWells FargoMaintains18.0
JAGWells FargoMaintains11.0
EOLSWells FargoMaintains15.0
MMCJP MorganAssumes118.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

First Session After Rate Hike Seems To Have Investors Mulling Fed Comments

Applied Optoelectronics Has Product Quality, Pricing Concerns, Loop Capital Says In Downgrade