Shares of Advanced Micro Devices AMD surged nearly 5% in early morning trading Thursday after the popular chip stock was the subject of another bullish analyst note.
This time around it was FBN Securities getting in on the action, initiating coverage on AMD with an outperform rating and a price target of $40. This bullish call would represent a 24% climb from the stock’s Wednesday close.
FBN analyst Shebly Seyrafi said he was optimistic about AMD’s uptick in Epyc server chips, which he wrote “could help AMD penetrate the $16 billion server-chip total addressable market.”
Seyrafi also mentioned that a ramp in Ryzen sales is “allowing AMD to gain share or stop share loss in CPUs over Intel INTC.”
Moreover, Seyrafi noted that AMD is making headway in the video game hardware market by partnering up with console makers like Microsoft MSFT and Sony SNE.
“We believe that Microsoft and Sony are more likely to launch major new gaming consoles in F2020 than in F2019, so we model AMD's semi-custom segment to decline in F2019 before growing again in F2020,” the analyst wrote.
AMD shares have skyrocketed more than 175% in the past six months as Wall Street continues to acknowledge the strides it has made in capturing shares of key markets from major competitors. Such moves are also resulting in significant top- and bottom-line expansion, with full-year earnings growth expected to touch 176% on revenue growth of nearly 26%.
AMD holds a “B” grade in the Growth category of our Style Scores system. Nevertheless, earnings estimate revision activity has been mixed as of late. AMD has witnessed five revisions to its full-year EPS estimates within the last 60 days—compared to three negative revisions in the same timeframe. This has resulted in the stock’s Zacks Rank #3 (Hold).
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