AMD Receives Strongest Buy Recommendation Yet
BofA analysts highlight AMD’s attractive valuation amid its growth prospects, capitalizing on Intel’s production difficulties.
Advanced Micro Devices Inc. (AMD) shares, which have surged an impressive 173% year-to-date (YTD) compared to the S&P 500’s modest 8% gain, are projected by market experts to continue outperforming the broader index.
(Also see: Stifel Predicts AMD Could Soar Over 25% with PC Market Recovery.)
AMD’s Valuation Stands Out Compared to Its Growth Potential
On Tuesday, Bank of America Merrill Lynch emerged as AMD’s most optimistic supporter, raising their 12-month price target from $25 to $35, as reported by CNBC. Analyst Vivek Arya highlighted AMD’s edge in manufacturing processes over competitor Intel Corp. (INTC), which has encountered delays with its next-generation chip production.
This updated price target suggests a potential 25% gain from Tuesday’s closing price and represents the highest forecast among 24 Wall Street analysts covering AMD, according to FactSet data.
Arya, who maintains a buy rating on AMD, anticipates the Santa Clara-based company to capitalize on Intel’s manufacturing setbacks. Intel postponed its 10-nanometer chip launch to the 2019 holiday season, while AMD is set to introduce faster, more energy-efficient 7-nanometer server chips next year.
"We expect ongoing positive developments regarding customer engagement (AMD is working with all top seven cloud providers, though only three have been announced so far) and a strong product pipeline," BofA stated.
Arya also emphasized AMD’s “attractive” valuation relative to its growth outlook, noting the company’s market capitalization of approximately $25 billion is only about 8% of the combined market value of its primary competitors, Intel and Nvidia Corp. (NVDA).
BofA’s optimistic stance aligns with recent positive updates from Jefferies and Cowen analysts, both of whom raised their AMD price targets to $30 on Tuesday.
Despite being the best-performing stock in the S&P 500 for 2018, AMD shares dipped 2.7% Thursday morning, trading at $27.75.
(Also see: Jefferies Sees Further Upside for AMD Stock, Up Nearly 200% in 2018.)
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