Advanced Micro Devices (AMD) shares are off to a decent start in 2023, up 15% year-to-date and making up in part for the horrible losses notched during 2022. However, at the current level they appear too pricey for Deutsche Bank’s Ross Seymore to get on board.
“We applaud the company for its strong product execution, which has positioned it particularly favorably to continued Data Center share gains,” says the 5-star analyst. “However… we believe the stock is fully valued.”
Seymore’s comments come ahead of the chip giant’s 4Q22 results (Tuesday, January 31). The analyst expects the company to deliver revenue of $5.53 billion, amounting to a sequential drop of 1%, and roughly in-line with the guidance’s midpoint ($5.2-5.6 billion) and consensus at $5.52 billion.
Segment wise, boosted by the launch of the 4th gen EPYC processors (November 2022 saw the launch of “Genoa”), Seymore expects Data Center to carry the weight with revenues growing by 3% quarter-over-quarter, also in-line with guidance. That should provide a counter to Client and Gaming declines (down 6%, each). On the bottom-line, Seymore is calling for PF EPS of $0.68, just a smidgen higher than the Street at $0.67.
Looking ahead, for 1Q23, Seymore is expecting the company to guide for revenues of $5.65 billion, amounting to a 2% sequential increase, and slightly higher than the Street’s forecast of $5.58 billion. At the other end of the scale, 1Q23 PF EPS is anticipated to reach $0.73, also above consensus at $0.70.
As for the full-year guide, Seymore expects ongoing share gains in Data Center will be “offset by macro softening elsewhere,” with Client/Embedded/Gaming anticipated to put in weak showings. Therefore, Seymore expects AMD to set a “relatively conservative bar” for revenue growth in CY23, anticipating the company will call for 7% growth (Street has 6%).
All in all, Rosner remains sidelined on AMD shares, with a Hold rating and a $68 price target, which indicates possible downside of ~9%. (To watch Rosner’s track record, click here)
Turning now to the rest of the Steet, where based on 17 Buys vs. 6 Holds, the stock claims a Moderate Buy consensus rating. Going by the $83.93 average target, the shares will climb ~12% higher in the year ahead. (See AMD stock forecast)
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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.