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Earnings season is picking up steam and on Tuesday, after the bell, Advanced Micro Devices (AMD) will announce its quarterly results.
Going by recent positive pre-announcements from peers, Intel and Nvidia – both expect to post higher revenue than prior guidance – Deutsche Bank’s Ross Seymore anticipates “another characteristic beat/raise.”
“Overall,” the 5-star analyst said, “We expect another solid quarter from AMD, as the company is firing on all cylinders (server CPUs, game consoles, notebook/desktop CPUs, discrete GPUs), with supply-limited potential for incremental upside to the company’s 1Q guidance and its CY21 rev growth outlook (DBe +40% y/y for CY21 vs. AMD guide of +37%).”
Over the past year, AMD has benefited from the WFH trend. Any worries that with reopenings, this tailwind will subside are evidently misplaced.
IDC/Gartner data points to 55% and 32% year-over-year growth in PCs, respectively, and Seymore thinks the company’s C&G (computing and graphics) segment could spring a positive surprise, “albeit somewhat limited by continued foundry supply constraints.”
In EESC (enterprise, embedded and semi-custom), the analyst forecasts a “somewhat smoother game console cycle than prior cycles,” while for the Rome server business, Seymore expects “continued growth” and will hope to glean some insight on “customer engagement” with the new EPYC Milan products.
Overall, Seymore calls for Q1 revenue of $3.25 billion, amounting to an 82% year-over-year uptick and slightly above the consensus estimate of $3.21 billion. EPS is expected to hit $0.45, a cent above the Street’s call.
Looking ahead to the second quarter, Seymore expects AMD will guide for revenue to increase by 72% year-over-year to $3.33 billion, roughly 2% higher than Wall Street’s $3.28 billion estimate. Once again, the 2Q21 EPS estimate of $0.47, is a cent higher than the Street’s forecast.
Interestingly, however, despite the glowing review and elevated expectations, Seymore has a Hold rating for AMD shares. The analyst cites a valuation which “sufficiently reflects the company’s growth potential and any upside to EPS,” as the reason for staying on the sidelines. Seymore’s $90 price target implies one-year upside of 9%. (To watch Seymore’s track record, click here)
Looking at the consensus breakdown, most analysts disagree. 13 Buy reviews are joined by 5 Holds and 1 Sell, all resulting in a Moderate Buy consensus rating. The average price target stands at $103.59, suggesting shares will add 25% over the coming months. (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.
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