All Eyes on Advanced Micro Devices, Inc. 4Q:17 Earnings Tonight

Do the "stars appear to align" for AMD? One bull and one sidelined analyst chime in, both with encouraged takes on what to expect from the chip giant's big earnings showcase.


Advanced Micro Devices, Inc. (NASDAQ:AMD) shares are falling nearly 3% ahead of tonight’s fourth quarter print due, but one confident voice hangs in the balance, highly anticipating an outclass.

Rosenblatt analyst Hans Mosesmann bets on this chip giant’s chances to not only achieve his expectations, but likewise “exceed” them, along with the Street- thanks largely to the recent crypto craze that has contributed to strength in both CPU as well as GPU segments.

Therefore, the analyst reiterates a Buy rating on AMD stock with a $22 price target, which implies a nearly 70% upside from current levels. (To watch Mosesmann ‘s track record, click here)

Additionally, Mosesmann wagers a beat will stem from “broad-based market trends including share gains in CPUs,” although this is also “offset by ~40% q/q decline in game consoles.”

When it comes to expectations for the first quarter guide for the new year, Mosesmann looks for a quarterly sales dip of roughly 9%, noting the company saw “better than seasonal CPU/GPU,” but points out slight weakness in game consoles.

“For 2018, we expect, as was the case for 2017 last year, that the guide will likely be a high-level call for continued revenue and gross margin growth driven by CPU share and ASP gains, favorable GPU trends (excluding crypto), and semicustom trends offsetting weaker game console sales,” writes Mosesmann.

Market share capture momentum lies in AMD’s favor from where this bull is standing, as he elaborates: “Specific to 4Q17, we see AMD gaining important market share with results we estimate driving CPU sales up double digits and ~50% y/y, compared to Intel’s […] results (CCG excluding modems), of flat-to-down q/q and down ~4% y/y.”

“We see AMD’s product CPU portfolio entering 2018 as the best in its history including a Ryzen desktop 12nm refresh, a wide range of Zen-based APU variants where AMD enjoys unambiguous and likely sustainable leadership due to Vega graphics,” asserts Mosesmann, singing the semiconductor player’s praises.

Recently, with chatter focused on rival Intel with its serious security vulnerabilities from the “Meltdown/Spectre” cyber-attack, the question has lingered: what could this mean for AMD? The analyst argues that the impact here will be “limited,” considering AMD’s Zen is largely “immune to the Meltdown.” As far as the Spectre factor, Mosesmann points out that most modern CPUs have been exposed, AMD included.

MKM analyst Ruben Roy weighs in from the sidelines, but with an upbeat research report, anticipating the company’s short-term guide will lean “more positive.”

The latest data highlights that with buzz round PC, server, as well as cryptocurrency mining markets, this chip giant is quite possibly raring for a fourth quarter outperformance, much like Mosesmann predicts.

Therefore, “mostly on near-term trends,” though the analyst reiterates a Neutral rating on AMD stock, he boosts the price target from $13 to $14.50, which implies a nearly 12% upside from current levels. (To watch Roy’s track record, click here)

This outclass will mostly benefit from cryptomania, Roy believes, and for this reason, it seems the fourth quarter print along with the first quarter guide for 2018 seem not nearly as critical as the AMD team’s comments on what to expect for the full year of 2018. Though the analyst readies for a continuously “positive” tone from the AMD management team in terms of new product lineups, he overall finds it a wise move for the company to stay the “conservative course” in terms of a longer-term guide- “for now.”

“With AMD shares up 26% YTD (SOX +10%), we believe that near-term strength is widely anticipated,” cheers the analyst.

Roy also points out expectations for the company to surpass its own outlook setting estimates for a 15% revenue slip compared to the company’s third quarter performance in 2017.

By 2019, the analyst places odds on AMD to achieve approximately 10% in revenue growth, rising to $6.48 billion coupled with a 45% rise in earnings growth to $0.55 compared to his forecasts for this year- projections that correspond with the Street.

TipRanks points to caution tinged with optimism when it comes to this semiconductor stock’s prospects. Based on 12 analysts polled in the last 3 months, 7 rate a Buy on AMD stock, 3 maintain a Hold, while 2 issue a Sell on the stock. The 12-month average price target of $16.35 notably suggests nearly 28% in return potential for the giant.

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