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UPDATE: MKM Partners Upgrades AMD (AMD) to Neutral; While 'Verging on Irrelevancy' they See Limited Downside

October 4, 2012 7:34 AM EDT
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Price: $179.59 --0%

Rating Summary:
    46 Buy, 14 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 9 | Down: 6 | New: 8
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(Updated - October 4, 2012 12:40 PM EDT)

Shares of AMD (NYSE: AMD) are higher Thursday after the company received a rare upgrade.

MKM Partners upgraded AMD from Sell to Neutral with a $3 fair value target.

While the firm still has a "structurally negative" view of the company, with shares at a 3-year low and down 22% since the CFO resign on Sept 17 and the potential for some cash generation this year and next, near-term downside may be limited.

"AMD has an unclear future, and we certainly don’t see any positive near-term fundamental catalysts, but our sense is that the keys to our long-held bearish view – ongoing execution problems, a total lack of a compelling data center offering, poor competitive positioning in PCs against INTC and no viable mobility products – are generally well understood by investors," analyst Daniel Berenbaum said.

With the company "verging on irrelevancy," a realistic bull case would have to be built around "(1) incremental potential from game consoles starting in 2H13 (though it’s debatable how strong the new console cycle will be) or (2) the potential for a takeout (though we don't see any logical buyers, and INTC's valuation suggests that x86 design capability is not worth as much as it once was)." In the core business, Intel has retained technolgy leadership and dominance in PC above budget level, and ARM-based competiros may well beging to encroach on AMD low-end PC sweet spot. This while shares loss of NVIDIA in GPU seems likely to continue.

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 $3.12 yesterday.


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