AMD (AMD) Delivers Another Beat-and-Raise, Analysts Hike Numbers Citing 'Superior Products and Manufacturing Process'
Shares of Advanced Micro Devices (NASDAQ: AMD) are trading 2.5% higher in early Wednesday trading after the company reported strong Q2 and guided higher for Q3.
The company made a profit of $0.63 per share on revenue of $3.85 billion. This is higher than expectations of $0.54 per share on sales of $3.62 billion. On a year-to-year basis, sales nearly doubled.
"Our business performed exceptionally well in the second quarter as revenue and operating margin doubled and profitability more than tripled year over year," Chief Executive Lisa Su said in a news release.
"We are growing significantly faster than the market with strong demand across all of our businesses."
For Q3, AMD said it is projecting to record sales of $4.1 billion (up 46%), a figure that topped the market expectations of $3.82 billion. On a full-year basis, AMD expects revenue to rise by 60%, an upgrade compared to the prior outlook of 50%.
Rosenblatt analyst Hans Mosesmann hiked the price target to $150.00 per share from $135.00 following “another big beat-and-raise” quarter.
“This time [is] even more compelling given industry supply chain shortages and an increasingly more vulnerable Intel (weaker portfolio and delays of next generation CPUs). AMD took up sales growth for 2021 to the 60% level from 50% (and 37% from January) on broad-based demand and share gains on everything they offer, literally. All new 5nm roadmap confirmed on-track for 2022,” Mosesmann commented in a note.
“Gross margins at 48% (100 bps beat) and operating margins are starting to inflect positively on overall ASP lift and leverage from increasing scale, particularly in data center where market share is still relatively small. The gross margin narrative was a key bear narrative into the print for some muddled reasoning coming from Intel price aggression, supply constraints, and/or game console mix,” he added.
Mosesmann also weighed on AMD’s commentary on the chip shortages, noting the posture was “better than we had foreseen.”
Similarly, Northland analyst Gus Richard raised the price objective to $125.00 per share on the Outperform-rated AMD.
“AMD reported strong Q2 and guided Q3 up and raised revenue growth guidance for CY21 from 50% to 60%. All product lines are driving growth and AMD is winning higher margin SKUs. We believe AMD outperformance is drive by superior products built on a superior manufacturing process. We do not expect this advantage to diminish any time soon,” Richard said.