Equity research analysts at Oppenheimer are out with research notes on semiconductor giant Advanced Micro Devices, Inc. (NASDAQ:AMD) and networking leader Cisco Systems, Inc. (NASDAQ:CSCO). The analysts reflect on AMD’s EPYC launch event and Cisco’s Catalyst 9000 introduction. Let’s take a closer look:
Advanced Micro Devices, Inc.
AMD’s server chip EPYC launched last evening in Austin. AMD will bring 8- to 32-core (16- to 64-thread) server processors to market with the starting price points of a full-equipped 32-core device at $4,200 down to ~$400 in the lowest performance configuration – all with consistently unconstrained memory and I/O bandwidth.
Oppenheimer analyst Rick Schafer sees EPYC as a 2018 story: “While we recognize hyperscale customers’ incentive to break the Intel server CPU monopoly, we believe EPYC/Naples remains a 2018 story, and would await seeing tangible signs of share gains before modeling significant contribution from Naples near term.”
“AMD could look to price EPYC aggressively at least initially, similar to its strategy with Ryzen client CPUs, limiting the near-term margin accretion. We remain on the sidelines here, seeing limited near-term profitability in the model as AMD works to ramp its new high-end initiatives: Ryzen client CPUs, Naples server CPUs, Vega high-end GPU accelerators,” Schafer continued.
Bottom line: “While Ryzen client processors seem to be generating initial traction, it remains unclear if AMD will be able to secure large enough share vs. INTC/NVDA in server CPUs/ GPUs to allow meaningful and sustainable profitability. Given the run-up and lofty expectations for new product roll-outs, we remain sidelined here.”
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 16.4% and a 70% success rate. Schafer has a -50.3% average return when recommending AMD, and is ranked #63 out of 4569 analysts.
Cisco Systems, Inc.
Yesterday, Cisco introduced a new family of switches built from the ground up for the new realities of the digital era, centered on the demands of mobility, cloud, IoT and security. The Cisco Catalyst 9000 delivers unmatched security, programmability and performance by innovating at the hardware and software layers.
Oppenheimer analyst Ittai Kidron commented, “The new Catalyst 9000 series of switches are the first new campus switch introduced by Cisco in over a decade (since the Gig/PoE push in early 2000s). We believe this is an important announcement for several reasons: (1) it can trigger an upgrade cycle of Cisco’s campus switch installed base (very old >4 years), (2) it enables the acceleration of its Cisco One Software transition and introduces new subscriptions further accelerating the recurring revenue push, (3) it creates key differentiation in a highly competitive market (vs. HPE/Huawei). With recent sluggish results in this area and above average margin contribution, Cisco has the opportunity to see improved results in this area in 2018.”
Kidron rates Cisco Systems shares an Outperform with a price target of $36, which implies an upside of 13% from current levels.
According to TipRanks.com, analyst Ittai Kidron has a yearly average return of 2.7% and a 52.5% success rate. Kidron has a 12.7% average return when recommending CSCO, and is ranked #1179 out of 4569 analysts.