Analysts Speculate on Two Semiconductor Stocks: Advanced Micro Devices, Inc. (AMD), Micron Technology, Inc. (MU)


Semiconductor stocks came under pressure today, dragging the Philadelphia Semiconductor Index down over 1.5 percent. However, equity analysts at Canaccord and Baird were out with some positive commentary on chip giants Advanced Micro Devices, Inc. (NASDAQ:AMD) and Micron Technology, Inc. (NASDAQ:MU). Let’s take a closer look.

Advanced Micro Devices, Inc.

In a research report released Thursday, Canaccord analyst Matt Ramsay upgraded shares of AMD from Hold to Buy, while lifting the price target to $6.00 (from $3.25), as he believes that AMD’s FinFET products and VR-infused console cycles set up return to profitability.

Ramsay wrote, “With an improved GPU and x86 CPU roadmap now on leading FinFET process nodes, recent business divestitures and IP licensing deal infusing cash to lessen balance sheet risks, and just ahead of a gaming console upgrade cycle catalyzed by 4K and virtual reality (VR) content, we are upgrading shares of AMD.”

“Most certainly, roadmap execution, competition and financial risks remain; however, we remain impressed with the new management team and our estimates that assume only modest market share recovery in core markets should yield material upside to estimates and a quick recovery to solid profitability given lower expense levels necessitated by the company’s recent struggles. Further, several potential upside call options remain including new semi-custom engagements with hyperscale cloud partners, a re-entry into the high margin x86 server market, and future CPU and GPU IP monetization efforts,” the analyst continued.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Matt Ramsay has a yearly average return of -1.6% and a 48% success rate. Ramsay has a -33% average return when recommending AMD, and is ranked #3103 out of 3971 analysts.

Out of the 16 analysts polled by TipRanks (in the past 3 months), 5 rate AMD stock a Buy, 7 rate the stock a Hold and 4 recommend a Sell. With a downside potential of 23%, the stock’s consensus target price stands at $3.58.

Micron Technology, Inc.

Baird analyst Tristan Gerra was out pounding the table on Micron Thursday, reiterating an Outperform rating and price target of $18, which implies an upside of 53% from current levels.

Gerra noted, “We met with Micron’s management this week. Mobile and server DRAM are tracking about in line with initial expectations for the year while PC DRAM is tracking at the lower end of the expectation range. Improved DRAM fundamentals, in part due to end-market diversification, are highlighted by the fact that DRAM industry gross margin were half current levels at similar oversupply levels during the last memory downcycle.”

“Reiterating Outperform rating on valuation, our view DRAM supply/demand trends will start improving in C2H, strong NAND supply/demand outlook for C2H, along with Micron’s secular cost structure improvement in NAND as the company ramps 3D NAND. 3DXPoint demand, likely mostly driven by intel initially, also represents a longer-term mix improvement opportunity, in our view,” the analyst concluded.

According to TipRanks.com, analyst Tristan Gerra has a yearly average return of 6.7% and a 57% success rate. Gerra has a -8.1% average return when recommending MU, and is ranked #626 out of 3971 analysts.

Out of the 38 analysts polled by TipRanks, 28 rate Micron stock a Buy, 6 rate the stock a Hold and 4 recommend a Sell. With a return potential of 47%, the stock’s consensus target price stands at $17.29.

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