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AMD Long

by SignalFactory   ·  July 28, 2020 | 13:33:46 UTC  

AMD Long

by SignalFactory   ·  July 28, 2020 | 13:33:46 UTC  

After Intel’s embarrassing disclosure and the company’s fresh line of personal computer chips, Advanced Micro Devices stock is heading into its second-quarter earnings at nearly a record five-year high.

Days after AMD (ticker: AMD) released details about its new line of PC chips built with a so-called seven-nanometer fabrication process, Intel (INTC) said its own attempt to make transistors of that size would be delayed a further six months. Investors largely see Intel’s manufacturing weakness as an opportunity for AMD to gain market share from its considerably larger rival.

Investors have rewarded AMD, bidding it up roughly 20% over the last five trading sessions. Now, it is the most expensive name in the PHLX Semiconductor Index, trading at 61 times forward earnings compared with Intel stock which is valued at 11.6 times forward earnings.

Sell-side analysts are expecting AMD to report adjusted earnings of 16 cents a share on sales of $1.86 billion, of which $1.36 billion is expected from its computing and graphics division and the remaining $485 million from its enterprise embedded and semi-custom segment. The company has previously issued quarterly sales guidance of $1.75 billion to $1.95 billion. In the year-ago quarter, AMD reported adjusted earnings of 8 cents a share and sales of $1.53 billion.

Last week, RBC analysts Mitch Steves was bullish enough about the stock to raise his target price to $71 from $66. Steves wrote in the note that the number of Hold recommendations for the stock has likely created a large number of low estimates for fiscal 2021 estimates and has dragged down the averages considerably. His team likes AMD because of its server revenues, the demand for graphics processing units (GPUs) from gamers because of the coronavirus-related lockdowns and positive results from Texas Instruments which suggested personal electronics were benefiting from the same lift as GPUs.

  • The consensus EPS Estimate is $0.17 (+112.5% Y/Y) and the consensus Revenue Estimate is $1.86B (+21.6% Y/Y).
  • Analysts expect a Non-GAAP gross margin of 44.4% vs. guidance ~44%.
  • Over the last 2 years, AMD has beaten EPS estimates 63% of the time and has beaten revenue estimates 50% of the time.
  • Over the last 3 months, EPS estimates have seen 4 upward revisions and 26 downward. Revenue estimates have seen 7 upward revisions and 19 downward.

AMD Long (Buy)

ENTER AT: 69.98

T.P: 74.46

S.L: 67.75

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