AMD Remains On Track To Meet Targets, Says Analyst

Advanced micro-systems (AMD) failed to deliver the now almost customary beat-and-raise in its latest quarterly statement, even as the company posted record revenue on the back of strong server sales growth.

The chip giant generated sales of $6.55 billion, up 70.1% year-over-year and just ahead of the consensus estimate of $6.53 billion. For the bottom line, adj. EPS rose to $1.05, 2 cents above Wall Street’s forecast of $1.03. The data center was the star of the show, with revenue jumping 83% from the same period last year.

AMD stock recently overtook the market capitalization of its once much larger rival Intel, and as an indication of how AMD is crushing it in the data center market, Intel recently reported a 16% drop in sales. year-over-year for its data center server segment. .

Spoiling the occasion, however, the high-level prospects narrowly missed Street’s expectations. Due to continued PC weakness, although AMD managed to hit its third-quarter sales target of $6.5-6.9 billion, the figure is below analysts’ call at 6.84 billions of dollars. Nonetheless, AMD stuck to its full-year revenue forecast of $26 billion to $26.6 billion.

Scrolling through the print, Susquehanna analyst Christopher Rolland notes that the company remains on track to achieve its goals, even in the face of a “challenging IT environment”.

“Despite the softer PC backdrop, AMD reiterated its full-year outlook, supported by server strength,” the 5-star analyst said. “While we had forecast a missed and reduced estimate in Q3, the forecast was only slightly below and certainly ‘better than feared’. More importantly, management reiterated its guidance for full year of $26.3 billion. That said, this creates an ambitious target for Q4 (even with week 14), especially given the uncertainty around the PC market and the traditional decline in brackets.

All told, there is no change in Rolland’s positive (i.e. buy) rating or $115 price target. The implication for investors? More than 12% compared to the current price. (To see Rolland’s prize list, Click here)

Most analysts support AMD’s continued success, though not all believe it. The stock boasts a moderate buy consensus rating, based on 19 buys, 8 holds and 1 sell. Given that the average price target stands at $123.50, there is room for around 21% appreciation in the stock over the coming year. (See AMD stock predictions on TipRanks)

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