| | | AMD Reports Earning Tuesday. Here's What To Expect. -- Barrons.com
Dow Jones Newswires April 27, 2020 04:23:00 PM ET
Advanced Micro Devices is likely to post strong results when the company announces first-quarter earnings after the close of trading on Tuesday.
For the quarter, the company (ticker: AMD) previously projected revenue of $1.8 billion, up 42% from a year ago. The consensus among Wall Street analysts calls for $1.78 billion in revenue and profits of 18 cents a share.
AMD rival's Intel (INTC) last week reported better-than-expected March quarter results, driven by strength in both the personal-computer and cloud-server sectors. The memory-chip producer Micron Technology (MU) likewise recently reported strong results, driven by both PC and server demand.
In Intel's case, investors had a mixed reaction to the news, largely because of concerns about the outlook. Intel withdrew its previous financial forecasts for the full year, citing uncertainties tied to the Covid-19 pandemic and the associated financial downturn. Intel also cautioned that tailwinds boosting sales of PCs and servers in the first quarter were likely to fade in the second half of the year, due in part to a likely slowing of corporate spending.
One key question will be whether AMD maintains its current forecast for revenue for the full year, which calls revenue growth of 28%-30%. The Wall Street consensus, for $8.6 billion in sales, implies growth of 27.7%, slightly below the target range.
For the second quarter, the consensus view is that revenue will total $1.92 billion and that per-share earnings will be 21 cents.
UBS semiconductor analyst Timothy Arcuri, who has a Neutral rating on AMD shares, expects solid guidance for the June quarter. But he noted that because demand from data centers accounts for only 25%-30% of AMD's revenues, a more downbeat outlook for PC sales in the second half quarter "could weight on any updated full year commentary."
The Consumer Technology Association last week cut its forecast for 2020 laptop sales, saying it now expects a decline of 4%-20% as a result of the current economic downturn.
Susquehanna Financial Group analyst Christopher Rolland repeated his Neutral rating on AMD shares, but lifted his price target to $54, from $50. The stock was up 0.7% to $56.55 on Monday afternoon. AMD shares have gained 23% so far this year.
Rolland said he remains impressed by AMD's competitive advancements against Intel, in particular in laptop processors. But he also noted that AMD shares have dramatically outperformed other semiconductor stocks since the company's last earnings report. He said "2020 sets up favorably for AMD" versus current Street estimates, but that " investor sentiment likely bakes in much (but not all) of this upside."
BofA Global Research analyst Vivek Arya repeated a Buy rating on the shares Monday, keeping his $62 price target. Arya said he expects first-quarter results to be higher than expected, and that AMD's guidance for the second quarter will be in line with Wall Street forecasts, but that management will withdraw its full-year forecasts.
The keys for AMD, he says, will be to execute on new server design wins, and whether "new [gaming] consoles stay on track for the holiday season."
Write to Eric J. Savitz at eric.savitz@barrons.com
|
|
