Morgan Stanley Underweight on Advanced Micro Devices After Fourth Quarter Revenue Miss
MT NEWSWIRES 7:52 AM ET 1/30/2019
07:52 AM EST, 01/30/2019 (MT Newswires) -- Brokerage firm Morgan Stanley(MS) reiterated its underweight rating on Advanced Micro Devices(AMD) on Wednesday after the manufacturer of chips published mixed results for its fourth quarter while unveiling guidance for the first quarter which fell short of analysts' estimates.
"We have been impressed by what AMD[Advanced Micro Devices] has accomplished on the technology side in microprocessors, but remain cautious on the stock," Morgan Stanley's(MS) note stated. "The company did a good job of bringing down expectations for 1q [the first quarter], but still fell short of that, and even if the guidance for the full year is achievable, we would have preferred a more conservative outlook given three consecutive quarters guiding below consensus".
The note went on to say that it continues to model for server share gains at the more optimistic end of Advanced Micro Devices'(AMD) four-to-six quarter target,and solid continued gains in consumer desktop and notebook, but it still thinks that the most likely path is "slow growth this year".
"Given the size of the markets that the company is attacking, the operating leverage potential,and the 2020 promise, we continue to plan for a premium multiple of 23 x 2020e earnings, which still drives a price target of $17. Maintain UW [underweight]".
Advanced Micro Devices (AMD) generated $1.42 billion in revenue in its fourth quarter, up 6% from the corresponding quarter of the prior year but below the consensus estimate of analysts polled by Capital IQ for $1.45 billion. Adjusted earnings per share came in at $0.08, up from $0.01 a year earlier and in line the consensus estimate of analysts.
For the first quarter of 2019, the company is targeting revenue of approximately $1.25 billion, plus or minus $50 million, which would be a 24% year-on-year drop, according to Advanced Micro Devices(AMD). Analysts had projected first quarter revenue of $1.47 billion.
Shares of Advanced Micro Devices(AMD) were 10.1% higher at the time of writing. |
