Why This AMD Analyst Is Bumping Up Price Target For Stock By 19% Following Q4 Results

Zinger Key Points
  • AMD said Q1 will likely mark the bottom for the Client segment.
  • KeyBanc sees more favorable risk/reward and wants to own the stock for continued data center growth and share gains.

Advanced Micro Devices Inc. AMD announced late on Tuesday better-than-feared fourth-quarter results, sending its shares higher in after-hours trading.

The AMD Analyst: KeyBanc Capital Markets analyst John Vinh maintained an Overweight rating and increased the price target from $80 to $95.

The AMD Thesis: AMD’s fourth-quarter revenue and non-GAAP earnings per share, or EPS, came in above KeyBanc’s and the consensus estimates, Vinh said in a note. The first-quarter revenue guidance is slightly below the consensus estimate and the implied EPS is $0.56, below the consensus of $0.68, he added.

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Fourth-quarter Client revenue fell 51% year-over-year as the company continued to under-ship consumption to reduce downstream inventory, the analyst said. The company sees the segment’s revenue declining yet again in the first quarter but more modestly than in the second half of 2022, he noted. The first quarter will likely mark the bottom for PC revenue, the analyst said, citing the company.

The analyst noted that the company maintained its 2023 PC shipment forecast which calls for a 10% drop to 260 million units.

“Despite a NT inventory correction in cloud, data center is expected to be the primary driver this year, supported by the Genoa ramp,” said Vinh. The company did not issue 2023 guidance but suggested a second-half rebound across both revenue and gross margins, he added.

“While the correction in data center was worse than expected, we see more favorable risk/reward following the reset and want to own AMD for continued data center growth and share gains,” Vinh said.

Price Action: AMD shares traded 1.53% at $76.30 in after-hours trading on Tuesday, according to Benzinga Pro data.

Read Next: Can Market Sustain Upward Momentum In Tech-Heavy Earnings Week? Apple, Amazon, AMD, Alphabet, Ford Among Key Quarterly Reports To Watch

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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsTechchipsJohn VinhKeyBanc Capital Markets
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