Canaccord’s top analyst Matt Ramsay weighed in today on chip giant Advanced Micro Devices, Inc. (NASDAQ:AMD), summarizing expectations and key topics ahead of earnings on Tuesday, January 31.
Ramsay believes that 2016 was an impressive turnaround year for AMD, with a very strong new product roadmap set to launch in 2017. The analyst stated, “After Q3/16 delivered the first profitable quarter since 2014 for AMD, a transitional Q4/16 should be seasonally down sharply in the gaming console business and Compute & Graphics sales will not yet see benefits from the Ryzen CPU launch.”
“We believe investors will focus on 1) a Q1/17 guide that demonstrates solid channel fill for Ryzen desktop CPUs and 2) commentary on the upcoming Zen server and Vega GPU launches set for Q2/17. Given a very wide spread of near-term expectations we have uncovered during our recent investor conversations, we suggest more nimble investors own AMD post the issuance of Q1/17 guidance versus into results of a fairly inconsequential Q4/16. Longer term, we believe 2017 will demonstrate AMD’s much improved long-term roadmap and return the company to sustained profitability,” Ramsay continued.
In general, while debates remain as to overall long-term semiconductor market growth with secular declines in PC and tablet markets and a wellknown asymptote in global smartphone unit growth, the analyst continues to focus on pockets of solid semiconductor growth in market subsectors including: 1) datacenter, 2) gaming and video processing including AR/VR, 3) automotive, and 4) IoT and embedded markets. In addition, the analyst anticipates sentiment shifting toward smartphone- and iPhone-exposed companies out of Mobile World Congress in late February ahead of the 10th anniversary product cycle late this year.
In closing, Ramsay reiterates a Buy rating on AMD stock with a price target of $13, which implies an upside of 22% from current levels.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Matt Ramsay has a yearly average return of 20.8% and a 67% success rate. Ramsay has a 43.1% average return when recommending AMD, and is ranked #48 out of 4378 analysts.
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Out of the 13 analysts polled in the past 3 months, 10 rate Advanced Micro Devices stock a Buy, 2 rate the stock a Hold, while 1 recommends to Sell. With a potential upside of 9%, the stock’s consensus target price stands at $11.64.