Advanced Micro Devices, Inc. (AMD) Ready to Score with Its Best Server Product, Snap Inc (SNAP) Loses the DAU Growth Race to Instagram


In terms of foreboding, tech players Advanced Micro Devices, Inc. (NASDAQ:AMD) and Snap Inc (NYSE:SNAP) have certainly raised a fair share of eyebrows out on the Street, between AMD’s Ryzen facing tough appraisal and Snap’s daily plunge further and further following its gleaming IPO. From Rosenblatt’s perspective, AMD’s newly disclosed details on upcoming x86 Zen-based “Naples” are eye-catching, meriting a bullish stance despite competition from Intel and hesitant investors. Yet, for Aegis, when looking at growth metrics, Snap’s downward spiral is simply not cutting a confident future for the Snapchat parent. Let’s take a closer look:

AMD’s Ace of Cards: Naples

Though AMD might have taken an initial hit after reviews of its new desktop Ryzen were critical, Rosenblatt analyst Hans Mosesmann is directing enthusiastic attention instead towards the chip giant’s forthcoming release dubbed “Naples,” a high-performance server that he expects to be a game-changer.

As such, the analyst reiterates a Buy rating on shares of AMD with a $16.50 price target, which represents a 25% increase from where the stock is currently trading.

Mosesmann notes, “AMD disclosed more details of its upcoming server x86 Zen-based ‘Naples’, which we believe represents the best server product from AMD since the original Opteron CPU introduced over 17 years ago.”

True, “The street is not modeling AMD share gains in any x86 markets (PC or server) going forward,” says the analyst, who also notes a cloud of apprehension that has been recently settling atop the chip giant.

Moreover, “Investors we have talked to in the past week reflexively are skeptical on AMD and the prospects of any share gains due to Intel (INTC: Sell) retaliating with price,” to which the analyst retorts, “Fair enough. When you own the tips that strategy may work, however we have a more balanced environment going forward that is quite appealing to datacenter/cloud players.”

Overall, “We would expect Intel to cut prices, perhaps aggressively, and yet any Ryzen/ Naples sales AMD would enjoy would be at 50%-100% higher than the current AMD corporate gross margin level in the low-30’s percent. We surmise gross margins could be a problem, but not for AMD,” Mosesmann contends.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Hans Mosesmann is ranked #376 out of 4,513 analysts. Mosesmann has a 57% success rate and realizes 11.3% in his annual returns. However, when recommending AMD, Mosesmann loses 24.4% in average profits on the stock.

TipRanks analytics indicate AMD as a Buy. Based on 21 analysts polled by TipRanks in the last 3 months, 9 rate a Buy on AMD stock, 10 maintain a Hold, while 2 issue a Sell. The 12-month average price target stands at $10.86, marking a nearly 17% downside from where the shares last closed.

Snap Stumbling in Competition Against Instagram

Snap shares were falling almost 10% yesterday and Aegis analyst Victor Anthony does not see investor sentiment improving any time soon, considering daily active user (DAU) growth looks to persist on its deceleration spiral through the first two months of the first quarter of this year.

Concerned that “user growth remains an issue,” assessed per App tracking data, the analyst reiterates a Hold rating on SNAP with a price target of $22, which represents a just under 3% increase from where the shares last closed.

When looking at the sample, DAU growth of 3% year-over-year in January and February combined is a far fall from 15% in the fourth quarter of last year, 34% in the third quarter of last year, 53% in the second quarter of last year, and 42% in the first quarter of last year. Anthony underscores, “The tracking data suggests that the accelerated growth of net adds in December, though in part due to seasonality, did not continue into the new year.”

“In contrast, Instagram’s DAU growth was almost double that of Snapchat thus far in 1Q17, suggesting that Instagram continues to be a competitive force to Snapchat,” continues the analyst.

“Based on conversations with marketers we believe that Snap is likely to take advertising market share as more and more advertisers experiment with advertising on the app. However, if Snap fails to reaccelerate its user growth rate, its valuation could be negatively impacted,” Anthony concludes, worried that “Instagram’s DAU growth [is] outpacing Snapchat’s.”

According to TipRanks, Victor Anthony is ranked #161 out of 4,513 analysts. Anthony has a 63% success rate and gains 11.9% in his yearly returns. When recommending SNAP, Anthony earns 0.0% in average profits on the stock.

TipRanks analytics demonstrate SNAP as a Buy. Out of 7 analysts polled by TipRanks in the last 3 months, 2 remain sidelined on Snap stock and 5 are bearish. With a loss potential of 15%, the stock’s consensus target price stands at $18.14.

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