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Friday’s Market Insights: Snap Inc (SNAP), Advanced Micro Devices, Inc. (AMD)

Snapchat Shares Continue to Surge

With a smash-hit initial public offering Thursday, Snap Inc (NYSE:SNAP) shares continue to soar in Friday’s trading session, despite analysts’ concerns regarding the company’s valuation, which is obviously not cheap. Susquehanna analyst Shyam Patil also struggles to see SNAP as a long-term investment, noting, “While we see near-term upside potential, we’re worried about the long-term. The two most important factors for secular growth stories are the TAM and competitive positioning. The TAM is undeniably large for SNAP. However, the competitive positioning, particularly internationally, is precarious and appears to be getting worse with Facebook’s Snapchat-like product introductions for Instagram (Stories) and WhatsApp (Status). The competitive impact is clearly evident through SNAP’s 2H16 DAU net adds, which declined precipitously, due to the launch of Instagram stories and buggy Android updates. These developments could put SNAP’s international growth story in jeopardy.”

Patil initiated coverage on Snap shares with a Hold rating and price target of $22.00, which implies a 21% downside from current levels. According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Patil has a yearly average return of 10.5% and a 75% success rate. Patil is ranked #591 out of 4513 analysts.

Out of the four analysts polled by TipRanks, two rate Snap stock a Sell, while two rate the stock a Hold. With a downside potential of 45%, the stock’s consensus target price stands at $15.50.

AMD’s Shares on Sale

Advanced Micro Devices, Inc. (NASDAQ:AMD) shares fell as much as 8% today, on the back of speculations that Goldman Sachs has offered to sell 45 million shares on market at $13.70 per share. Yesterday, AMD shares dropped 6% following negative reviews regarding the company’s latest “Ryzen 7” processor, expressing disappointment with its gaming performance.

Rosenblatt analyst Hans Mosesmann recently commented, “AMD should gain share in desktops. The angle here is that gamers are likely to use that $500 savings to spend on a better display, or GPU card, or storage solution. An incremental tail wind for GPU spend.” However, “The real take-way: The 8-core Ryzen 7 is a 95 watt rated CPU, over 30% more thrifty on energy than Intel’s 8-core i7 6900K. This is an eyebrow-raising event to say the least and likely due to a very efficient design not easily solved by Intel in the near-term (process or architecture-wise).”

“We are in the camp of AMD re-capturing 10% or more of the x86 market in dollars (PC and server) as they did 7-8 years ago,” the analyst concluded.

Overall, 10 analysts are bullish on AMD stock, 10 remain neutral, while 2 are bearish on the stock. With a downside potential of nearly 17%, the stock’s consensus target price stands at $10.92.


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