As a result of yesterday’s earnings reports, brokerage firms Canaccord and Cantor have made changes to price targets on leading chip maker Advanced Micro Devices, Inc. (NASDAQ:AMD) and internet search giant Alphabet Inc (NASDAQ:GOOGL), respectively. Below are the changes along with current ratings and comments from lead analysts Matt Ramsay and Youssef Squali.
Advanced Micro Devices, Inc.
AMD shareholders have a reason to smile this morning after the company reported first quarter results, ahead of the Street’s expectations, sending shares surging nearly 20% in pre-market trading.
In reaction, Canaccord analyst Matt Ramsay raised his price target from $2.40 to $3.25, while reiterating a Hold rating on the stock.
Ramsay commented, “AMD reported soft Q1/16 results with revenue declining 19% Y/Y and a non-GAAP loss of ($0.12), evidence of seasonally softer sales in gaming consoles and a challenging PC macro, but with improved CPU/GPU market share driving results above consensus. More importantly, full-year guidance implies significant growth in the GPU and gaming console businesses driven by new Polaris products and VR consoles/accessories. Further, AMD signed a $293M server IP deal in China, providing confidence in the Zen server roadmap and a significant boost to cash flow and operating margins – setting up a return to non-GAAP profitability in 2H/16.”
“While we maintain our HOLD rating (for now) as shares jumped over 20% in AH trading, we believe AMD’s future CPU, GPU, and semi-custom roadmaps are strong and while competition remains fierce from Intel and NVIDIA and the macro environment remains challenging, the new management team deserves significant credit for the business turnaround. With strong guidance and new IPR revenue, we raise our estimates and our PT,” the analyst concluded.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 21 analysts rate AMD stock a Buy, 12 rate the stock a Hold and 6 recommend a Sell. With a downside potential of 24%, the stock’s consensus target price stands at $2.39. However, the price targets are expected to rise today.
Google shares are down 5% to $741 in pre-market trading Friday, after the company released its first-quarter results, with net revenue missed consensus by ~1%, and EPS missed consensus by ~6% due mainly to FX and a loss on marketable securities for the second quarter in a row.
Despite remaining optimistic, Cantor analyst Youssef Squali reduced his price target from $975 to $940.
The analyst explained, “Mixed 1Q:16 headlines obscure solid results across geos and product types. Revenue was off by a half of one percent vs. expectations, EPS missed on non-operating items, and EBITDA came out ahead. As the dominant player with ~50% share of the global online ad market, Google continues to grow far in excess of the group, generating ~50% EBITDA margins all the while making aggressive investments in Other Bets. We’re lowering our PT on higher TAC expectations.”
The analyst keep his rating at Buy, noting, “Maintaining our positive stance on GOOGL given, 1) sustained healthy growth in core search driven by mobile, 2) strong growth in display facilitated by Programmatic, 3) aggressive buyback ($2.3B/$1.8B in 1Q:16/4Q:15), and 4) compelling valuation relative to growth prospects.”
According to TipRanks.com, analyst Youssef Squali has a yearly average return of 15% and a 67% success rate. Squali has a 26.5% average return when recommending GOOGL, and is ranked #9 out of 3907 analysts.
Out of the 46 analysts polled by TipRanks, 44 rate Alphabe stock a Buy, while 2 rate the stock a Hold. With a return potential of 17%, the stock’s consensus target price stands at $912.71.