AMD earnings: Earning Estimate Last Quater: 0.47 vs -0.03 This Quater 1.16 vs 0.56
Good factors for AMD: 1)Jan- Mar is the worst quater of a year. 2)Manufacturing efficiency improves 3)New products are coming faster than its rival 4)German plant is going to go production. 5)A small market share it has currently.
The worst case: AMD is to earn the same for all three coming quaters (since this past quater is traditionally the weakest quater of a year). $1.16x4 =4.64
A conservative case: AMD grows its business in a rate similar to Intel as each of coming three demanding-strong quaters. I put $0.05 as quaters get stronger. $1.16+1.21+1.26+1.30 = $4.94
Good Case: Production efficiency improves give it another $0.05 bump, now the annual earning is to be: $5.24
Strong case: It gains market share of the chip market of, say, 5% (easily, right?). It earning will increase at least $1. $6.24
A semicond company command at least 20 PE and could be as high as 100.
For 20 PE: Worst: $100 best: $130
For 40 PE Worst: $200 Best: $260
My conclusion is that AMD price target ranges from $100 to $260 (and I think this is conservative). It eats market share of, say, 5% from Intel which gives