Wall Street analysts are gearing up for Advanced Micro Devices’(AMD) third-quarter earnings report scheduled to be released this afternoon after the closing bell.
Susquehanna analyst Christopher Rolland believes the chip giant should be able to meet/exceed 3Q18 expectations as it: 1) already missed and guided 3Q18 revenue down, resetting the bar lower; 2) continued to benefit from new product ramps (Ryzen Mobile/Epyc); and 3) may have experienced modest GPU channel restocking benefits.
“While we think there may be some risk for 4Q18 (on more crypto GPU headwinds), we note the Street is still estimating sub-seasonal, lowering the bar. Conversely, the Street’s 1Q19 is well above seasonal, and without any crypto-GPU, this becomes a much more difficult comparison. We think the Street will “stealth cut” 1Q19 estimates; otherwise, guidance after next quarter may be at risk. Constructively, 3Q18 CPU trended better for AMD as ODM notebook builds tracked in-line and as PC-SIGnals data indicated modest share gains. These share gains may have been accelerated by Intel shortages. Our trip to Asia revealed Epyc design win traction (finally), which could help provide upside for 4Q18 Enterprise, Embedded, and Semi-Custom (expected to be down -21% in 4Q18 QOQ). While we highlight risks for 1Q19, we recognize the potential for longer-term share gains on continued Intel 10nm delays.
As such, Rolland lifts his price target on AMD to $22.00 (from $14.00), while keeping his rating at Neutral. (To watch Rolland’s track record, click here)
BMO analyst Ambrish Srivastava added, “For AMD, we are in line with consensus for 3Q18 and below consensus for 4Q18. For 3Q18, we expect AMD to report revenues of $1.70 billion, down 3% q-q, and EPS of $0.12. We expect 4Q18 revenues of $1.55 billion, down 9% q-q, and EPS of $0.08, vs. consensus’ $1.59 billion, down 7% q-q and $0.11, respectively.” Srivastava rates AMD shares a Market Perform with a $20 target price.
When it comes to the preliminary word out on the Street for the chip giant’s opportunity, it for now seems positive, with TipRanks analytics demonstrating AMD as a Buy. Out of 24 analysts polled in the last 3 months, 10 are bullish on the stock, while 12 remain sidelined and 2 are bearish. With a return potential of 24%, the stock’s consensus target price stands at $28.73. (See AMD’s price targets and analyst ratings on TipRanks)