AMD (AMD) Shares Rally 11% on 'Crushing' Beat-and-Raise, New Street-High PT at Rosenblatt Reflects an Emerging Secular Semi Play
AMD (NASDAQ: AMD) reported another beat-and-raise quarter yesterday to send its shares 11% higher in after market hours.
Better-than-expected fourth-quarter earnings and sales numbers, in addition to a robust sales forecast for 2022.
For the quarter that ended December 25, AMD reported adjusted EPS of $0.92, topping the consensus estimates of $0.76 and up 26% YOY. Revenue came in at $4.83 billion, compared to the $4.53 billion consensus, and up 49% YOY.
As for 2022, AMD expects to generate $21.5 billion in sales, significantly higher than the analyst consensus of $19.26 billion. The forecast would represent a 31% rise compared to 2021 sales.
The semiconductor company said it anticipates $5 billion in sales for Q1 2022, fueled by server and PC processor sales.
Last year, sales in the company rose by 68%, while the gross margin surged 48%. The sales increase was reported in AMD’s computing and the graphic unit, which generated $2.6 billion in revenue, a 32% increase YOY.
Embedded, Enterprise, and Semi-custom segment, which sells chips for cloud serves and game consoles, reported revenue growth of 75% to $2.2 billion.
“We expect [semi-custom] revenue to grow this year driven by continued strong demand for the latest Microsoft and Sony consoles,” said AMD CEO Lisa Su.
“The only remaining regulatory review required is FTC approval of our HSR re-filing and we expect to close the transaction in the first quarter of 2022,” Su said.
Goldman Sachs analyst Toshiya Hari reiterated a Buy rating and lowered the price target to $159.00 per share from the prior $200.00 on AMD, which remains on GS’ Conviction Buy list.
Hari is expecting “positive EPS revisions based on renewed conviction on the company's roadmap and future share gains to translate into sustained share price outperformance.”
Rosenblatt analyst Hans Mosesmann, a well-known AMD bull, raised the price target to $200.00 per share from the prior $180.00.
“The 2022 sales outlook for over +30% y/y growth suggests that AMD will double year-on-year data center dollar share to the mid-20s%, which we think will be a historical record,” Mosesmann said in a client note.
He believes the company is now emerging as a secular semi play after a “crushing” beat and raise.
“We are early on this secular call for AMD (we usually are with this story), but we believe this transitional period of merely a share gainer in x86 processors to AI compute play will be accompanied by higher P/E valuation considerations,” Mosesmann added.
AMD stock price is up over 11% in pre-market Wednesday.
By Senad Karaahmetovic | [email protected]