AMD stock surged early on Monday, climbing by approximately 2% early despite an ultra-bearish analyst report from one firm. Unfortunately for the chip maker, the number of AMD stock bears is growing simply because its valuation has gotten so high, fueled not only by its own success but also by the overall outperformance of the Semiconductor sector
AMD 3Q17 earnings due Tuesday
AMD 3Q17 earnings are set for release on Tuesday after closing bell, and consensus currently stands at earnings of 8 cents per share on $1.5 billion in sales, which is right around the midpoint of the company’s guidance. In last year’s third quarter, the chip maker reported earnings of 3 cents per share on an adjusted basis on $1.31 billion in revenue.
In a note dated Oct. 22, Deutsche Bank analyst Ross Seymore said he expects the AMD 3Q17 earnings results to be solid with solid guidance as the company ramps its new products and rides on positive seasonality in two of its main segments. He’s projecting Computing & Graphics revenues of $772 million, marking a 17% sequential increase and 51% of total sales. He puts Ent, Embedded & Semi Custom revenues at $754 million, a 34% increase quarter over quarter and 49% of total sales. He estimates AMD’s third-quarter non-GAAP gross margin at 34%, an expansion of 90 basis points quarter over quarter.
He estimates that MPU revenues rose 19% sequentially and GPU revenues increased 15%. He also said that share gains from Intel in MPUs are implied and pointed out that IDC picked up an 11% sequential increase in PC shipments and a 13% increase in ODM revenues for the third quarter, both of which he said are better than their seasonal averages and his expectations. Further, he said that game consoles have enjoyed positive seasonality.
For the fourth quarter, Seymore is estimating $1.31 billion in revenues with an 18% year-over-year increase in full-year revenues, which would put it toward the high end of the chip maker’s revenue guidance for growth of 15% to 19% year over year. He continues to rate AMD stock at Hold with a $12 price target, as he feels that his above-consensus estimates are already reflected in the share price.
