Why Analysts Have Mixed Thoughts on AMD After Earnings

Technology

Published: April 29, 2020 12:10 pm

Advanced Micro Devices Inc. (NASDAQ: AMD) reported its first-quarter financial results after the markets closed on Tuesday. Although investors were somewhat negative on the stock, analysts had a mixed perspective on it.

24/7 Wall St. has included some highlights from the earnings report, as well as what a few analysts said after the fact.

For the quarter, AMD said that it had $0.14 in earnings per share (EPS) and $1.79 billion in revenue. Analysts were expecting $0.18 in EPS and $1.78 billion in revenue. The same period of last year reportedly had $0.01 in EPS and $1.27 billion in revenue.

Revenue increased 40% year over year, primarily driven by higher Computing and Graphics segment revenue. However, revenue was down 16% on a quarter-over-quarter basis due to lower revenue in both segments.

The Computing and Graphics segment revenue was $1.44 billion, up 73% year over year and down 13% quarter over quarter. Revenue was higher year over year, driven by strong Ryzen processor and Radeon product channel sales.

Credit Suisse reiterated a Neutral rating with a $33 price target. The brokerage firm detailed in its report:

AMD believes they gained PC unit share for the 10th consecutive quarter. Graphics enjoyed double-digit unit and Rev growth y/y thru sales of Radeon RX desktop/Notebook GPUs. EESC (19.5% of Rev) of $348m was down 25.2% q/q, and down 21% y/y and missed Street albeit completely driven by sharp decline in Semi-Custom with Server Rev more INLINE growing 10.5% q/q on momentum in Cloud/Enterprise/HPC.

Wedbush reiterated an Outperform rating and raised its price target to $60 from $57. The firm noted that the numbers were largely as expected as strength in notebook CPUs offset a weaker contribution from channel sales. Wedbush detailed one of the highlights from AMD’s report:

AMD’s ability to still provide annual guidance (albeit with lighter growth at the low end of the range) fits with our view prior to COVID that AMD’s outlook for client CPUs and GPUs appeared very conservative.

Here’s what a few other analysts had to say:

Nomura has a Buy rating with a $64 price target.
UBS reiterated a Neutral rating and raised its price target to $52 from $48.
Piper Sandler reiterated an Overweight rating and raised its target to $60 from $58.
Wells Fargo reiterated an Equal Weight rating and raised its target from $50 to $55.
JPMorgan upgraded to Neutral from Sell and raised its price target to $52 from $45.
Rosenblatt Securities reiterated it as Buy and raised its price target from $65 to $70.

AMD stock traded down over 2% to $54.13 on Wednesday, in a 52-week range of $26.03 to $59.27. The consensus price target is $50.99.