After a steady stream of upgrades over the last two weeks, one lone analyst finally took the risk of downgrading Advanced Micro Devices (NASDAQ: AMD). And although the average price target on AMD is $28, the downgrade from a Northland Securities analyst is notably contrarian. Did AMD deserve the downgrade?
Analyst Gus Richard cited lofty valuations and excessive expectations as risk factors for AMD’s stock appreciation in 2018. AMD has little to no room to not only surpass revenue and profit targets but it must beat the estimates by a wide margin.
Downgrading the stock at this time could play out correctly. AMD historically attracts profit-taking when the stock rallies so fast in so short a time. The drop creates yet another entry point for investors who missed the rally.
AMD’s prospects are growing. The positive momentum for Ryzen 2 in the desktop and notebook market will accelerate through the holiday season. In the server space, EPYC’s superior security, scalability, and price to performance ratio compared to that of Intel’s (NASDAQ: INTC) offering virtually assures market share growth and profits going up in the years ahead.
In the next quarter, AMD must not miss estimates. Seasonal strength should carry revenue higher and through to 2019.
AMD’s GPU division is getting largely ignored by the investor community. Nvidia’s (NASDAQ: NVDA) RTX 2080 is not as big a success as hoped on launch. This could create an opportunity for AMD to promote Polaris and Vega GPUs.
This article provided by NewsEdge.