24/7 Wall St. 2007 Price Target, AMD, $18

By Douglas A. McIntyre Published Jan 8, 7:15AM EST

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Over the next week 24/7 Wall St. will set mid-year price targets (June, 30, 2007) for the sixty most widely traded stocks. These targets will be based on past price performance, industry activity, forward projections of financial performance, outside analyst opinions, and research conducted for doing past articles on these firms. The price targets assume flat markets over the next six months. In other words, if the Nasdaq moved up 25% between now and mid-year, the target share price targets would probably be too low. If the market moved down by 20%, they would probably be too high.

Advanced Micro Devices (AMD). AMD shares are down over 40% in the last two years. Rival Intel’s shares have dropped 20%, so Wall St. is a bit more on-board with the larger company’s plans. The share price of the company going forward depends heavily on two variables: can it get share from Intel and will the price competition between the two companies hurt margins.

Wall St. is starting to signal that, after making gains against Intel over the last few quarters, the No.2 company’s best days are behind it. Both Goldman Sachs and ThinkEquity Partners recently cut their ratings on the company.

Price pressure from Intel may not abate in 2007. Gross margins for AMD in Q3 06, the last reported quarter feel from 56.8% in 2005 to 51.4% this year. As the larger company, Intel is in a better position to keep on the price pressure.

AMD’s advantage over Intel in chip computing power has vanished at the larger company has introduced dual and quad core chips. Mercury Research believes that Intel is now gaining market share from AMD for the first time in several quarters. It would appear that ATI, the graphics chip maker that AMD bought earlier in the year, is losing share to rival Nvidia.

Factors that could raise price above forecast: AMD has had success in taking share from Intel in the key server category. If it can demonstrate that it can continue this trend into 2007, it will be considered a huge benefit to the company’s share price.

Factors that could lower price below forecast: AMD’s margins could be dropping faster than the market believes. If this number gets into the 40s, AMD shareholders will have a very rough outing.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.