FBR Reiterates Perform on Advanced Micro Devices, Inc.; Here’s Why

FBR analyst Christopher Rolland came out today with a few insights on Advanced Micro Devices, Inc.(NASDAQ:AMD), after the company announced slightly worse-than-expected first-quarter results and unexpectedly worse second-quarter guidance, sending shares down 14% in mid-day trading.

Rolland noted, “Like its competitor Intel, PC shipments were affected by lower desktop processor sales and an inventory drawdown in front of the Win10 launch in 3Q15. Also disappointing, the company has discontinued its SeaMicro unit and disclosed that its two new semicustom wins would ramp in the back half of 2016. Perhaps the only silver lining was that the company announced a new wafer supply agreement with Global Foundries, which was reduced to $1 billion in 2015 (from $1.1 billion in 2014), with no special payment triggers.”

Bottom line, “In our view, the company has wisely directed its strategic focus away from the core PC market and toward gaming APUs, microservers, and custom embedded processors, areas on which its larger competitor is less focused. However, we now believe much of this transition has already played out, with visibility into meaningful peak earnings elusive.”

The analyst reiterated a Perform rating on AMD with a price target of $3.50, which represents a potential upside of 38% from where the stock is currently trading.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Christopher Rolland has a total average return of 9.9% and a 67.3% success rate. Rolland has a -1.2% average return when recommending AMD, and is ranked #395 out of 3573 analysts.

  • EdCoulter

    SeaMicro gone in less than 3 years. Sad they could not find a buyer to recoup some of the $334M in cash AMD paid for SeaMicro.

    • Yousuf Khan

      Not likely to be able to sell the SM assets when they’re keeping most of their IP. Most buyers would’ve wanted that IP anyways. SeaMicro is not such a bust, the technology remains. SeaMicro’s competitors, like Calxeda have already bit the dust, so SeaMicro was given an extra lease on life by AMD. Microservers were always a gimmick.

  • anubis44

    AMD probably wants to keep much of the technology they bought with SeaMicro for use in their upcoming generation of server chips: AMD K12 and Zen processors designed by chip superstar architect Jim Keller, whose last CPU design for AMD, the K8 (Athlon 64) beat Intel’s best.