The Bullish and Bearish Case for AMD Ahead of Earnings

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Advanced Micro Devices Inc. (NASDAQ: AMD) is scheduled to release its most recent quarterly results after the markets close on Monday. Over the past quarter the stock has seen a steady rise, with shares up nearly 20% from the beginning of the year. However, even before this, shares made a meteoric rise since 2015, rising roughly 1,000% in this time.

Despite the gains that this stock has made, analysts can’t seem to make their minds up on where shares are going to run from here. Looking ahead to the earnings report, the best we can expect are consensus estimates that call for a net loss of $0.04 per share and $984.38 million in revenue. The first quarter of last year reportedly had a net loss of $0.12 per share and $832 million in revenue.

As we said before, some analysts think this stock can run even higher, while others say that it has run enough. 24/7 Wall St. has taken a look at the bullish and bearish cases for the stock ahead of the earnings report.

In a recent report, Goldman Sachs called for investors to sell the stock and take profits. Essentially, Goldman Sachs issued a Sell rating with an $11 price target earlier in April.

The view is that AMD’s stock gains already reflect the improvements that may happen in its business and the high expectations for 2018. Also cited was an execution risk in issuing products and managing their costs. Despite a sharp improvement in AMD’s competitive and financial position, the firm noted that AMD’s enterprise value to sales was more than 200% over a five-year median.

Another warning from Goldman Sachs in this Sell rating is that AMD’s stock should underperform the market after its May analyst day presentation is behind it.

However, just as recently as March, other firms were setting street-high price targets for AMD. Canaccord Genuity issued a Buy rating for the stock with a $16.50 price target, up from $14.00. What drove the upgraded price target is that Canaccord Genuity had hosted a series of focused investor meetings with AMD CEO Dr. Lisa Su over the previous three weeks.

Canaccord Genuity sees AMD reemerging as a competitive second source to Intel across relevant x86 CPU markets from enterprise and gaming desktops, media-focused notebooks and certain server market segments. The firm also sees a gradual GPU unit share recovery in low market tiers and being able to deliver a multigenerational road map with customer backing and foundry partners. A total addressable market of $50-plus billion with modest growth assumptions and low market share levels may also be in the cards.

Shares of AMD were trading up 1.6% at $13.51 on Monday, with a consensus analyst price target of $12.20 and a 52-week trading range of $3.45 to $13.56.