AMD Analyst Turns Bullish After 10 Years; ‘Valuation Downright Attractive, Execution Stellar and Earnings Power Bankable’

By Benzinga
Benzinga
Benzinga
February 23, 2022 Updated: February 23, 2022

Advanced Micro Devices, Inc. shares are advancing on Tuesday, bucking the broader market downturn catalyzed by the escalating tensions between Russia and Ukraine.

The strength seen in the shares came after an analyst at Bernstein took a bullish stance on the stock after 10 years.

The AMD Analyst

Bernstein analyst Stacy Rasgon upgraded AMD shares from Market Perform to Outperform, with a price target of $150.

The AMD Thesis

This isn’t “AMD of a decade ago,” analyst Rasgon said in the note. Valuation of the stock is “downright attractive” due to a combination of “stellar execution, increasingly bankable earnings power and a recent sizeable pullback,” he added.

The analyst noted that AMD stock has fallen about 30 percent from its November peak and currently trades at 30 times the estimated earnings per share for the next twelve months.

The valuation, Rasgon said, is approaching the cheapest it’s been in five years.

AMD’s market share is improving, especially in notebooks and servers, the analyst noted. Rasgon also noted that AMD’s pricing has improved relative to competition.

The company’s desktop CPU, on average, is on par with Intel Corporation’s, and ASPs of notebooks are starting to get closer, he said.

In the server market, AMD’s ASPs have exceeded competitors’ pricing, allowing it to take a clear leadership position, Rasgon added.

“Intel’s recent commentary at their analyst day last week suggests the next several years may be open season in datacenter,” the analyst said.

AMD’s management is more bullish than the current consensus on Xilinx, which points toward additional upside, he added.

“Overall we believe the continued strong fundamentals, coupled with the recent stock declines are making the shares appear increasingly attractive for investors who, much like us, might have continued to sit on the fence, likely for too long,” Bernstein said.

By Shanthi Rexaline

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