Very Little Chance of Insolvency at Advanced Micro Devices (AMD)

November 19, 2012 10:49 AM EST
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Shares of Advanced Micro Devices (NYSE: AMD) have declined 66 percent this year, and considering weakness in the PC market, among other worries, investors have serious concerns about the company's future. The largest of these fears is, no doubt, insolvency. Despite this concern, Analysts at Williams Financial Group have a Buy rating on AMD, as they view insolvency as unlikely.

"The largest argument against insolvency is simply its shareholder base," said analyst Cody G. Acree.

"Currently the Mubadala Development Corp. is by far AMD’s largest shareholder, recently increasing its holdings from 107 million shares, or 15% of AMD, or 142 million shares, or 19% ownership . . . With this level of interconnection, we see very little chance that Mubadala would not provide AMD with any needed liquidity," he said.

While the analyst agrees AMD is dealing with a significant number of challenges, he believes the company has many alternatives and opportunities.

"In our opinion, if the concerns over insolvency are taken off the table, AMD's shares should return to at least the $3-$4 range, where it traded prior to the last earnings report," concluded Acree.

Williams Financial Group has a $7.00 price target on AMD.

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

Shares of AMD closed at $1.86 yesterday.

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