Canaccord Lifts PT on AMD (AMD) to $8.50; Zen, Polaris Showing Positive Signs Early

August 25, 2016 11:33 AM EDT
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Price: $9.75 -0.2%

Rating Summary:
    13 Buy, 16 Hold, 6 Sell

Rating Trend: Up Up

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    Up: 30 | Down: 30 | New: 23
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Canaccord Genuity boosts its price target on Buy-rated Advanced Micro Devices (NYSE: AMD) from $7.50 to $8.50 as the firm gets positive on the company's product line, including Zen and Polaris.

Analyst Matthew Ramsay commented, With several catalysts still to come, our BUY thesis remains intact, despite the recent stock appreciation, and we continue to gain confidence in 1) AMD re-emerging as a competitive second source to Intel across relevant x86 CPU markets, 2) gradual unit share recovery with Polaris/Vega in discrete GPUs with ASPs trending higher for both AMD and NVIDIA, and 3) ramping business with AMD's unique position with key gaming console partners with 4K/VR gaming increasing hardware refresh rates.

Modest growth assumptions drive our estimates materially above consensus as much investor skepticism remains. In addition, several material upside call options remain for the AMD story that given a relatively fixed operating and interest/tax cost basis could move non-GAAP EPS materially. While we recognize that roadmap execution, competition and financial risks remain, we remain impressed with the new management team and anticipate a quick recovery to solid profitability given lower expenses necessitated by the company's recent struggles.

Finally, we believe risk/reward remains unbalanced to the upside despite the recent stock move and we reiterate our BUY rating and raise our price target to $8.50 given gradually increasing confidence in the CPU and GPU roadmaps and in 14nm yields at partner Global Foundries given foundry influences from both Samsung and IBM.

For an analyst ratings summary and ratings history on AMD click here. For more ratings news on AMD click here.

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