There has been a lot of action on Wall Street this week with new earnings reports from Advanced Micro Devices, Inc.(NASDAQ:AMD) and Apple Inc. (NASDAQ:AAPL). Let’s take a look and see why Rosenblatt analysts remain bullish on AMD, while advising caution with AAPL.
Advanced Micro Devices, Inc.
Advanced Micro Devices, Inc. (NASDAQ:AMD) posted its worst trading day in 12 years after releasing financial results that failed to live up to Wall Street’s high expectations.
However, Rosenblatt analyst Hans Mosesmann remains positive on AMD, raising his price target to $20 (from $16.50), while reiterating a Buy rating on the stock.
Mosesmann noted, “Nice meet and beat print with our estimates moving up and price target to $20. Look for AMD’s share gains in x86 to continue through the rest of 2017 and 2018 as we are in the early days of a multi-year AMD x86 cycle where the company now has a top to bottom solution after years in exile. Today straw man arguments may place pressure on the shares however we would use this potential dynamic as a buying opportunity.”
“We point to significant share gain opportunity going forward vs. Intel and believe the gross margin tailwind is also an important factor,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Hans Mosesmann has a yearly average return of 9.9% and a 56% success rate. Mosesmann has a 14.6% average return when recommending AMD, and is ranked #496 out of 4572 analysts.
Out of the 25 analysts polled by TipRanks in the past 12 months, 11 are bullish on AMD stock, 11 remain sidelined, while only 3 are bearish on the stock. With a return potential of 11.0%, the stock’s consensus target price stands at $11.62.
Yesterday, Apple reported fiscal second-quarter revenues and EPS of $52.1 billion and $2.10, respectively, compared to consensus estimate of $53.0 billion and $2.02, respectively.
Management guides June revenue to be $43.5-45.5 billion and implied EPS $1.44-1.60, below consensus estimate of $45.6 billion and $1.62, respectively.
After reviewing the earnings report, Rosenblatt analyst Jun Zhang reiterated a Neutral rating on Apple shares, with a price target of $120, which implies a downside of 18% from current levels.
Zhang commented, “June quarter revenue guidance confirmed our concerns that Apple is still facing some iPhone 7 inventory issues. In a previous note of ours in March, we expected Apple to cut iPhone 7 production for the June quarter.”
“Apple’s revenue in China was down 14% YoY in the March quarter. In our view, Apple is facing increasing competition from local Chinese brands including Huawei, OPPO and VIVO, especially for the legacy model for which sales have dropped. We believe the iPhone 8 launch will not improve Apple’s situation in China, but rather still face competition.” That said, “Although the market sentiment on the iPhone 8 cycle is very positive, the soft demand from China and increasing competition from Samsun will challenge the cycle,” the analyst continued.
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Jun Zhang has a yearly average return of -9.9% and a 42% success rate. Zhang has a -8.1% average return when recommending AAPL, and is ranked #4123 out of 4572 analysts.
The overwhelmingly of analysts still say Apple is a “Strong Buy.” The average forecast is for the stock to hit $58 in the coming months.