AMD stock fell 12% in early trading as bears piled on the company's disappointing outlook for this quarter's gross profit margin, arguing the company hasn't met high expectations after a 256% run in the shares over the past 12 months. Bulls argued the quarter and outlook show the company is on track with its new product roll-outs, which means it's worth it to stick with the shares. - From http://www.barrons.com/articles/advanced-micro-drops-12-wheres-the-beef-ask-bears-1493730722
Despite a discussion of the matter by CEO Lisa Su and her executive team on the conference call following the report, that hasn't obviously stopped the stock fall nor prevented some critical language in the Street coverage this morning.
There is at least one downgrade of the stock this morning, by Macquarie's Srini Pajjuri, who cut his rating to Underperform from Neutral, and cut his price target to $10 from $14, writing that the results and outlook are simply not enough given high expectations.
Goldman Sachs's Toshiya Hari, reiterating a Sell rating, and a $10.60 price target, writing that the company "failed to exhibit the 2Q upside the Bulls were anticipating." Concludes Hari, "Bottom line, as we illustrated in our April 6 initiation, we believe the stock at 33x our CY19E op EPS is priced for perfection (as can be implied by the 11% after hours price decline) and recommend investors stay cautious." Stifel Nicolaus's Kevin Cassidy reiterates a Hold rating, calling the results "respectable," writing that the results and outlook show a "successful Ryzen launch" and therefore "remove some near term execution risk," as do the indications the other product debuts are on schedule.
Credit Suisse's John Pitzer, reiterating a Neutral rating, and a $10.50 price target, writes that "investors will be disappointed that a full quarter of Ryzen is not driving better leverage," even if "bulls argue that Ryzen is still a small percentage of mix and Naples has not yet shipped," referring to the company's forthcoming server processors.
reiterated an Outperform rating and raised his "valuation range" to $13 to $15 from a prior $11 to $13, writing that the company "continues to execute well," and that the sales rise of 18% in the quarter, and its outlook for 12% growth this quarter, shows "AMD is continuing to demonstrate a recovery in sales and move towards profitability." AMD noted that it remains on track to launch Zen-based servers (Naples) and its new Vega GPU chips in the second quarter of 2017.