Advanced Micro Devices (NYSE: AMD) showed an earnings report yesterday that wasn’t full of any great news, but the good side of it was that it wasn’t as bad as many would have guessed. In fact, its margins were ahead of plan and the non-GAAP results were almost acceptable.
This morning, Doug Freedman, Managing Director of Research at American Technology Research issued an alert that the firm is Upgrading AMD shares to BUY from Hold and the new target price is $10.00 for the stock. The note says the stock has finally washed out and everything has a price. Here is a brief quote from the note:
- "We believe AMD’s current stock price finally reflects as pessimistic an outlook as possible barring a liquidity crunch, which we do not foresee happening. While we believe AMD’s debt also represents a compelling opportunity for investors at current yields, as equity analysts we believe AMD’s stock also offers a cheap ‘call option’ on a potential restructuring. We view risk/reward as favorable with a 1-down, 4-up scenario in the stock price."
This does note that the quarter was far from perfect but says that AMD is finally showing some expense discipline and appears focused on extracting value for shareholders.
Goldman Sachs still has a Sell rating on the stock and it lowered estimates for 2008 and 2009 earnings from the processor and graphics card maker. That’s what makes a ball game. Hector Ruiz is still our #1 Pick out of CEO’s that need to leave tech companies. We recently noted that a recession might actually save some bad CEO’s but AMD would be far better if Ruiz would go see "Do The Right Thing."
We also noted yesterday a huge short interest had built up in this stock, so some short covering is expected today. AMD stock is up 10% to $7.00 in early trading. Its recent 52-week low was $5.31.
Jon C. Ogg
January 18, 2008