Daily Management Review

Barron's: AMD's share price will double in 2017


Analysts see an opportunity for double-digit growth of AMD's stock price in the current year, according to Barron's. Over the past year papers of the producer of chips and graphics solutions have risen fivefold.

This year, AMD's position may strengthen significantly. This statement relates not only to the central processor market, where AMD competes with Intel, but also to the market of graphics processors, where AMD fights with Nvidia, believe Barron's analysts, quoted by Reuters. As a result, shares of the American manufacturer of chips and graphics processors can show a twofold increase in price for the year.

Confidence of the experts can partly be explained by the fact that the company has made a bet on graphics processors for desktop and mobile systems.

Analysts noted significant progress made by the company under leadership of Lisa Su. In the IV quarter, AMD has reduced its net loss by $ 102 million to $ 51 million, and increased its revenue from $ 958 million to $ 1.11 billion. During the year, revenue growth amounted to 7% (up to $ 4.27 billion) and net loss decreased by a quarter (up to $ 497 million).

Excluding certain irregular expenditures and incomes, AMD had revenue loss of 1 cent per share, which corresponds to forecast of analysts polled by FactSet. They predicted revenues at $ 1.07 billion.

AMD financial results largely depend on mood in the world market of computers. However, despite declining PC sales, AMD’s unit Computing and Graphics Business Group (production and sale of chips for desktops, laptops and tablets) has completed the IV quarter of 2016 with 28% increase in revenues to $ 600 million. Operating loss in this structure amounted to $ 21 million versus $ 99 million losses a year earlier. Such a jump in the unit’s sales occurred thanks to a strong demand for GPU.

AMD Enterprise’s division Embedded and Semi-Custom Business Group (chips for servers, embedded systems and video game consoles) recorded a quarterly operating profit of $ 47 million. Revenue was $ 506 million, that is, 4% more than a year ago thanks to growing sales of customized Systems-on-a-Chip (used by game consoles manufacturers such as Xbox and PlayStation).

Over the past year, AMD's stock price has increased five-fold. At the auction on Friday, they fell 0.33% to $ 12.24. The company's capitalization is $ 11.31 billion. Analysts partly explain the jump in price byy the fact that the company’s management has made a bet on graphics processors for desktop and mobile systems.

AMD’s representatives declined to comment on this forecast, but noted that the company is preparing a number of new interesting products. "This year, we plan to release the strongest product line in the last ten years. Hence increased investor interest in our assets in the current year." - AMD’s representative Andrew Prairie commented to Reuters. 

According to media, AMD is preparing to release high-performance GPU Vega and new processor Ryzen. These products are expected to be presented in the first half of 2017. 

source: reuters.com

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