Wells Fargo Upgrades AMD (AMD) to Outperform; Building Confidence; Raising 2011 Estimates

October 28, 2011 7:35 AM EDT
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Price: $10.58 -1.67%

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Wells Fargo upgraded AMD (NYSE: AMD) from Market Perform to Outperform with a price target range of $6.00-$7.50.

Wells analyst says, "AMD’s guidance for sequential sales growth in the December quarter suggests to us that AMD has to some extent managed to adjust for its Llano yield problems, and also to improve Llano yields. AMD’s ability to hold down operating expenses builds our confidence in the company being able to remain profitable and generate cash as it moves through the current soft patch. The sharp drop in AMD’s internal inventory minimizes AMD’s inventory risk. 10% sequential growth in AMD’s graphics revenues suggests to us that AMD maintained, and possibly gained discrete graphics share in the most recent quarter. AMD's microprocessor ASP rose (by, we think, perhaps as much as 10%) while Intel's (Nasdaq: INTC) was flat sequentially, showing a good pricing environment for microprocessors. HP (NYSE: HPQ) announced that it has decided against divesting its PC division. We consider this to be positive for AMD as, in our view, HP has in the past demonstrated a clear inclination to offer both AMD-based and Intel-based computers."

"Our 2011 EPS estimate rises to $1.04 from a prior $0.98. We are leaving our 2012 estimate unchanged at $0.74."

For more ratings news on AMD click here and for the rating history of AMD click here.

Shares of AMD closed at $5.33 yesterday.

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