AMD (AMD) PT Raised to $47 at Cowen Following CEO Su Meetings

Cowen analyst Matthew Ramsay raised the price target on AMD (NASDAQ: AMD) to $47.00 (from $40.00) while maintaining an Outperform rating following meetings with CEO Lisa Su.

Ramsay said, following the meetings, "we believe AMD's consistent track record of execution under her leadership, and stable roadmap, is increasingly resonating with customers and investors."

The analyst said they came away from meetings pleasantly surprised at the long-term nature of investor conversations and inquires. "In short, our conversations continue to shift to "when", not "if" questions in terms of share gains and EPS/CF growth, as investors largely no longer question whether or not AMD will gain material x86 share or deliver upon its roadmaps, but instead try to better understand the cadence, magnitude, and competitive roadmap positioning," the analyst commented.

"Conversations have notably shifted toward long-term x86 TAM capture enabled by Zen-2/3 n-node desktop, server, and notebook products given clear TCO leadership," he added.

Ramsay notes the topic of AMD's long-term model and share targets remains of keen interest to investors. Management only commented they plan to update these targets soon and we believe an analyst day in early 2020 is likely. While the analyst leaves out any guidance speculation regarding the long-term model, they believe 20%+ dollar share of AMD's x86 target markets of desktop, notebook and server, along with gross margins approaching 50% are reasonable long-term targets.Should AMD execute against this type of long-term model, they analyst lays out a bull case revenue, margin and EPS scenario that yields $3/EPS for discussion.

"Should long-term EPS approach $3.00 as our hypothetical bull case lays out above, today's share price of <$40 we believe still holds attractive valuation," Ramsay notes.

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