All Eyes on Advanced Micro Devices’ (AMD) 2Q:18 Earnings This Evening


Advanced Micro Devices (NYSE:AMD) is churnings its earnings wheels as Wall Street’s eyes are peeled to see the “doubleheader” this chip titan has in store.

With AMD preparing to release second-quarter earnings after the closing bell today, Susquehanna analyst Christopher Rolland remains cautious on the stock, wondering “if they [AMD] can fill the crypto hole.”

Rolland wrote, “While 2Q18 should benefit from significant GPU channel restocking and new product ramps (Ryzen/ Epyc), we identify some risks for 3Q18 as crypto-related GPU sell-through slows. That said, the Street has de-risked some GPU slowdown as consensus now models a massively subseasonal Computing and Graphics segment in 3Q18 (just +2% QOQ versus +8% typical). By examining the slowdown in the Ethereum network hash rate, we believe AMD’s Ethereumrelated GPU sell-through may have declined as much as -75% QOQ, resulting in a ~$290 million hole that needs to be filled over subsequent quarters.”

“The following drivers may help AMD bridge the gap: 1) a prolonged GPU channel refill into 3Q18, evidenced by AMD graphics cards that still trade above MSRP (+$50 to +$100 million?); 2) increasing share for Ryzen desktop (+$40 million?); 3) increasing AMD GPU attach rates in desktops (+$40 million?); 4) initial channel stocking for Ryzen Mobile, which (finally) ramped at retailers over the last month (+$100 million?); and 5) constructive PC shipments in 2Q18 (+$30 million?),” the analyst added.

Net net, Rolland reiterates a Neutral rating on AMD stock, with a price target of $11, which reflects a potential downside of -31% from last closing price.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Christopher Rolland has a yearly average return of 9.7% and a 66% success rate. Rolland has a -9.0% average return when recommending AMD, and is ranked #412 out of 4835 analysts.

Overall, out of the 24 analysts polled in the past 12 months, 11 rate AMD stock a Buy, 9 rate the stock a Hold and 4 recommend Sell. With a slight downside potential, the stock’s consensus target price stands at $15.83.

 

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