Advanced Micro Devices’ (AMD) hot streak is showing no signs of fatigue. Buoyed by the release of continuously well received products generating growing market share, the stock is up by 79% so far this year.
Heading into Tuesday’s Q3 earnings, the chipmaker will be hoping to extend the run even further.
The quarter has been bookended by July’s launch of the new Ryzen 4000 Series processors and the recent rumors of the $30 billion Xilinx takeover.
Looking forward to the print, Deutsche Bank analyst Ross Seymore’s estimates are roughly in line with those of the Street.
Seymore expects revenue to increase by 44% year-over-year and 34% quarter-over-quarter to $2.59 billion, slightly ahead of consensus at $2.56 billion and the guidance midpoint of $2.55 billion. On the bottom-line, at $0.36, the analyst’s forecast is in-line with the Street’s.
On the earnings call, Seymore expects investors will be keen to gain more insight regarding the potential Xilinx acquisition. Should the deal materialize, the analyst expects “a mixed reaction in the near-term” but, overall, believes the deal to be a “long-term positive.”
That said, despite the expectation of a “solid” report, when currently considering AMD as a viable investment, Seymore has a problem.
“Overall, we remain impressed with AMD’s strong new product execution and expect the resulting share gain benefits to be sustained over the next 1-2 years,” The 5-star analyst said. “However, we fear that the optimism reflected in AMD’s current share price may not reflect the company’s end-market exposure/GM details in the near term and the risk that significant share gains both in CPUs and GPUs are priced in that may have over-run AMD’s ability to execute towards those gains consistently in the coming quarters.”
As a result and “given the combination of these near-/long term fundamental risks,” Seymore rates AMD a Hold. Additionally, Seymore’s $75 price target implies shares will stay range-bound for the foreseeable future.(To watch Seymore’s track record, click here)
There are plenty of other Street analysts backing Seymore’s take and recommending a Hold, too – 13, in fact. An additional 11 Buys and 1 Sell add up to a Moderate Buy consensus rating. Overall, the analysts expect shares to add 5% over the coming months, given the $86.70 average price target. (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.
