Jefferies Weighs in on Advanced Micro Devices Inc. (AMD) Following Debt and Equity Financing

Jefferies top analyst Mark Lipacis is updating his model for Advanced Micro Devices Inc. (NASDAQ:AMD) amid the company’s recent debt and equity financing. Lipacis reiterates a Buy rating on AMD with a price target of $9.00, which represents a nearly 47% increase from where the shares last closed. Additionally, the analyst boosts his 2017 EPS projection by $0.08.

From the analyst’s checks, the Asia channel is singing the praises of the new ZEN Desktop MPU, with a projected ramp for the first quarter of 2017, which Lipacis anticipates “will be competitive against Intel’s Core i5 in the enthusiast channel.”

Why is the company’s debt and equity financing deal so important? For one, it drives back the first material debt payment from 2019 to 2022, and two, it cuts the annual interest expense run-rate.

Ultimately, Lipacis recognizes forthcoming catalysts, even in the wake of AMD’s recent stock run, concluding, “Our checks on AMD’s Desktop Zen indicate it will take share and we estimate that Zen (DT+Server+NB) could ultimately be $0.22-to-$0.96 accretive. We think there are multiple catalysts over the next 9 months. AMD’s new CEO appears to be executing a turnaround – we think the Street has yet to catch on.”

Particularly with AMD”s “latest wins for the upgraded processors,” the analyst commends the company for solidifying its “dominance in the game console market,” and looks to “wildcards” like the ARM64 semi-custom design “win” and an additional IP/Licensing deal to “draw more investor attention to the turnaround.”

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Mark Lipacis has achieved a high ranking of #12 out of 4,163 analysts. Lipacis upholds a 75% success rate and realizes 19.7% in his yearly returns. When recommending AMD, Lipacis earns 16.6% in average profits on the stock.

TipRanks analytics demonstrate AMD as a Hold. Based on 16 analysts polled in the last 3 months, 5 rate a Buy on AMD, 5 maintain a Hold, while 6 issue a Sell. The 12-month average price target stands at $5.67, marking a 7% downside from where the stock is currently trading.


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