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AMD: A Quality Chip Play But Upside May Be Limited

Over the past few years, Advanced Micro Devices (AMD) has siphoned away market share for its products from traditionally bigger chip market rivals, and at the same time delivered massive share gains for investors.

As for the latter, those gains have been harder to come by in 2021. But where the former is concerned, heading into 2Q21’s results today, Deutsche Bank’s Ross Seymore believes AMD will deliver the goods once again.

“We expect AMD to deliver another strong report and guide, with DBe modestly above Street revenue estimates in both 2Q and 3Q, and modeling +52% y/y revenue growth in CY21 (vs. co’s recently updated guidance of +50% y/y),” the analyst said.

Seymore expects Q2 revenue to hit $3.65 billion, at the high end of AMD’s $3.5 to 3.7 billion guided range, reflecting a 6% quarter-over-quarter uptick and an 89% increase from the same period last year. Street has $3.61 billion. At $0.55, EPS is also expected to come in slightly above the $0.54 consensus estimate.

Seymore’s expectations for Q3 are also above the Street’s. The analyst is anticipating sales of $3.89 billion, while consensus estimates call for $3.81 billion. The analyst has EPS at $0.56, again just slightly above the Street’s $0.55 forecast.

Seymore obviously thinks AMD is delivering the goods and expects the company to “continue to execute on new product offerings and navigate a difficult supply environment adeptly.”

However, the analyst believes “the company’s current share price adequately balances the chance for upward estimate revisions with the risk of increased competitive pressure, supply constraints, etc.”

As a result, Seymore sticks to a Hold rating and $90 price target, suggesting shares will remain range bound for the foreseeable future. (To watch Seymore’s track record, click here)

Seymore’s view is that of a vocal minority. Amongst Wall Street analysts, there are 6 fellow fencesitters, but they are up against 11 Buys, which results in the stock’s Moderate Buy consensus rating. The average price target currently stands at $109.92 indicating one-year gains of ~23%. (See AMD stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.