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AMD receives mixed reviews when the stock falls after earnings



AMD's recent earnings did little to change, as bulls cheered on new product lines while on the sidelines expressing concern about margins.

Shares of AMD

AMD, -0.64%

was 1.8% on Wednesday after the company delivered results in line with expectations while falling slightly short of the midpoint of its revenue forecast.

The fuel optimism for RBC analyst Mitch Steves was AMD's disclosure that both revenue and units increased more than 50% in sequence in central processing units (CPUs).

"This is important, as [average selling prices] probably increased substantially when about half of the quarter saw some shipments of the new EPYC II pieces," Steves wrote. "As ASPs increased, sales are unlikely to increase by 50% as units increased by 50% for the quarter."

Opinion: AMD looks like a bright star in a dark chip sector [1

9659002] Steves was less positive about estimates that AMD's semi-custom business fell more than 50% in succession. Still, he sees room for this area of ​​the company, which tends to have relatively high operating margins, to contribute more positively in the coming year.

"Although the console cycle is healthy / solid by 2020, despite being a & # 39; unloved & # 39; business, it does mean significant operating profit and cash flow for the rear half of 2020.

Steves said AMD bears may be focusing on the company's weaker-than-expected fourth-quarter revenue forecast, but he attributes that weakness to timing issues and a challenging landscape for the company's console business, which he considers "not the core of AMD history." Steves rates the stock by surpassing a target price of $ 44.

Read: It's not just Texas Instruments, Morgan Stanley warns

Susquehanna's Chris Rolland said he "liked [s] the moving parts" to despite the "slightly" weaker than expected report, but he wrote that AMD's lack of product performance disclosures is still disappointing.

"We continue to think that AMD should explicitly break out the Epyc contribution, as it should now be a ves entlig part of the EESC [AMDsvirksomhetinnebygdogsemi-customsegment"skrevRollandsomharennøytralratingpåaksjenogslooppsittkursmålmedendollartil$35"MensmangelenpåavsløringfortsetteråfrustrereossantyderfortellingenatAMDsproduktermedhøyereverdifraEpycNaviogRyzen3gårbra"

Lavpoeng Rolland included the significant drop in the semi-custom activities and AMD & # 39; s operating expenses, which were" worse in the third quarter as the company continues to support new product ramps, ”he wrote.

Opinion: Two struggles with industries could tear tech's revenue season

Bernstein analyst Stacy Rasgon argued that the report "wasn't terrible on the surface" just because investors seemed a little nervous about the company heading into earnings. While he estimates that the company is "almost certainly" still picking up shares, he saw no signs of bending in the latest figures, calling the next report "a critical test" as it should give a glimpse of the company's outlook in 2020.

"As strong as the server ramp is, we believe it is still below expectations, and the & # 39; double-digit & # 39; share timelines now appear to be solid into 2020," he wrote. "[Gross margins] even growing as they are, still feel like more should be coming given the significant shift in product mix. And more generally, the sheer scale of the rise ahead of them is becoming clearer, with Intel

INTC, -0.43%

(for now) seemingly largely unaffected by AMD's success (~ $ 80 million quarter-over-quarter server profit versus ~ $ 1.4 billion), potentially making the argument for a transformative & # 39; AMD tougher. & # 39;

Rasgon estimates the stock on the market with a target price of $ 25.

Jefferies analyst Mark Lipacis believed that AMD is well positioned to take on Intel because of its work with Taiwan Semiconductor Manufacturing Co. Ltd.

TSM, + 0.74%

“We think it is important to consider that AMD, as a fabulous company, does not work alone; it works with TSMC which makes the heavy promise of developing the next process node, ”Lipacis wrote. TSMC's customers, like Apple

AAPL, -0.51% ,

Xilinx

XLNX, -1.44%

and Qualcomm

QCOM, -0.43% ,

Because TSMC also collaborates with the high-profile clients, Lipacis said it might be more appropriate to look at the "Intel versus AMD" match as being an Intel versus "AMD + TSMC + AAPL + XLNX + NVDA" match.

He the stock is considering a $ 40 target buy.

Six analysts set their price target on AMD shares according to the report, according to FactSet. Of the 38 analysts that tracked the stock, FactSet has 14 buy, 21 hold and Three have seller ratings, and the shares are up 74% so far this year, like the S&P 500 index

SPX, -0.11%

has risen 21%.


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