Earnings season always brings surprises and serves as a catalyst for ratings. In light of recent reports, analysts weigh in on chip maker Advanced Micro Devices, Inc. (NASDAQ:AMD) and software giant Microsoft Corporation (NASDAQ:MSFT). Let’s take a closer look.
Advanced Micro Devices, Inc.
AMD shares jumped nearly 29% in pre-market trading Friday, after the company reported first-quarter sales of $832 million, versus the Street’s $818 million. The company also guided 2Q sales of ~$955 million at midpoint, well above the Street estimate at $888 million. Moreover, the company announced a $293M licensing agreement and JV with China company THATIC, aimed at developing server processors for the China market.
However, Oppenheimer analyst Rick Schafer remains cautious, reiterating an Underperform rating on the stock.
Schafer commented, “Shares should play some catch-up given the surprise positive JV/licensing announcement. We like the looks of the deal, but remain skeptical of AMD’s ability to generate sustainable top-line growth and profitability. Continued balance sheet/FCF concerns combine to keep us sidelined here.”
“While the progress towards IP monetization is encouraging, we maintain a wait-and-see stance with regard to AMD’s product outlook,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Rick Schafer has a yearly average return of 17.5% and a 69% success rate. Schafer has a 13.3% average return when recommending AMD, and is ranked #12 out of 3907 analysts.
Out of the 21 analysts polled by TipRanks, 4 rate Advanced Micro Devices stock a Buy, 11 rate the stock a Hold and 6 recommend a Sell. With a return potential of 2%, the stock’s consensus target price stands at $2.68.
In a research report issued Friday, Jefferies analyst John Difucci reiterated an Underperform rating on shares of Microsoft, with a price target of $40, after the company reported fiscal third-quarter revenue in line with consensus and earnings that missed by two cents a share, sending shares lower 6% in pre-makret Friday.
Difucci commented, “MSFT reported mixed F3Q results, as headline revenue and EPS were in line to a bit better after adjusting for higher than expected tax, but some of the components were not as anticipated. More Personal Computing was about $200M better than expected, offsetting the shortfall in the sacred Intelligent Cloud business, while Productivity and Business Processes was in line. F4Q revenue guidance was below consensus for every segment, as was the implied bottom line.”
According to TipRanks.com, analyst John Difucci has a yearly average return of 3% and a 53.5% success rate. Difucci has a -13% average return when recommending MSFT, and is ranked #1071 out of 3907 analysts.
Out of the 28 analysts polled by TipRanks (in the past 3 months), 20 rate Microsoft stock a Buy, 6 rate the stock a Hold and 2 recommend a Sell. With a return potential of 3%, the stock’s consensus target price stands at $57.52.