Advanced Micro Devices, Inc. (NASDAQ:AMD) plunged 14% in premarket trading Tuesday morning, July 7. The company cut its outlook, saying it expects second-quarter revenue to fall 8%, marking a significant decrease from AMD’s previous estimate of a 3% decrease. The company lowered its revenue estimate based on weaker-than-expected consumer demand for PC’s. It won’t be until after markets close on July 16 that investors know full results.
There has been a significant consumer shift from personal computers (PCs) to smartphones and tablets, which has taken a toll on traditional chipmakers for several quarters. AMD has suffered over the past 12-months, having fallen approximately 52%. Additionally, the stock has fallen 21% year-to-date. AMD has a lot to live up to when it reports earnings on July 16 with pressure from investors wanting to know what direction the company is heading.
In light of AMD’s upcoming earnings results, Canaccord Genuity analyst Matt Ramsay reiterated a Hold rating on the stock with a $2.25 price target on July 7. Ramsay believes “AMD’s diversification strategy continues to show gradual progress and a refreshed roadmap could position the company for more defensible long-term sales”
The analyst added, “despite believing in the leadership under AMD’s new CEO Lisa Su, we continue to wait for tangible signs of core business stability or new product inflection before becoming more constructive on shares.”
When measured over a one-year horizon and no benchmark, Matt Ramsay has an overall success rate of 59% recommending stocks, earning a +8% average return per recommendation. The analyst has rated AMD a total of five times with no success and a -33.1% average loss per AMD recommendation.
Feeling more bullish on AMD is Northland Securities analyst Gus Richard. Following the negative preannouncement, on July 7, the analyst reiterated a Buy rating with a $5 price target. He reasons that the announcement “should not be surprising,” and that investors should accumulate shares on weakness.
Richard commented, “We think Q2 is the bottom of the PC inventory cycle, and we already see evidence of builds picking up in Q3.” Furthermore, he believes AMD’s “competitive position in graphics improved with the introduction of Fiji GPU and [expects] Zen CPU to sample in 2H.”
When measured over a one-year horizon and no benchmark, Gus Richard has an overall success rate pf 70% recommending stocks, earning a +13.6% average return per recommendation. He has rated AMD twice, earning a 100% success rate recommending the stock and a +7.8% average return per AMD recommendation.
Out of 14 analysts polled by TipRanks, four analysts are bullish on AMD, eight are neutral, and two are bearish. The average 12-month price target for AMD is $2.85, marking a 35.71% potential upside from where stock is currently trading. On average, the all-analyst consensus for ADM is a Hold.
Cody Miecnikowski writes about stock market news. He can be reached at [email protected]