Mizuho analyst Vijay Rakesh upgraded AMD (AMD) to Buy as improving 2020 servers and market share gains position the company well. The analyst, who noted the stock's outperformance last quarter, said that he sees more upside to consensus. Shares of AMD are on the rise on Thursday.
BUY AMD: Mizuho's Rakesh upgraded AMD to Buy from Neutral and raised his price target on the shares to $55 from $38. The analyst said he believes the 2020 server market could be stronger than current "muted" consensus expectations. Further, Rakesh noted that many of the aggressive Intel (INTC) price cuts are in the rear-view mirror and, as his checks indicate potential Intel delays in the 10nm Ice Lake single socket server market, said he sees an opportunity for AMD server share gains into the second half of 2020. Additionally, the analyst told investors that he expects a better first half of 2020 PC market versus consensus combined with a new PS5 (SNE) AMD gaming console cycle starting in the second half of 2020. While admitting he missed AMD's rally in the fourth quarter, the analyst sees more upside to consensus estimates "with some headwinds retreating."
AMD TO TAKE SHARE FROM INTEL, NVIDIA: In a research note to investors on Tuesday, Nomura Instinet analyst David Wong argued that AMD's steady build out of its 7nm product lines will help drive market share gains from Intel in microprocessors and Nvidia (NVDA) in graphics processing units in 2020. The analyst highlighted that in conjunction with the CES Trade Show in Las Vegas, AMD launched its first 7nm notebook APUs, a new top end 7nm Threadripper desktop CPU and some additional 7nm discrete GPUs. Wong reiterated a Buy rating and a $58 price target on AMD shares.
Meanwhile, Wells Fargo analyst Aaron Rakers raised his price target for AMD to $55 from $48 as the company "consistently executes on a competitively strong and broadening client CPU/APU roadmap." While Rakers prefers the risk/reward set-up in Nvidia at current levels, the analyst told investors that he remains positive on AMD's drivers to $2-plus/share in earnings per share. He has an Overweight rating on AMD's shares.
LIMITED COMPETITIVE THREATS TO SLOW MOMENTUM: Last week, Rosenblatt analyst Hans Mosesmann also raised his price target for AMD to $65 from $52, and reiterated a Buy rating on the stock. While he acknowledged AMD's recent outperformance, the analyst said he views 2020 as a year in which the company will continue its early momentum in CPU share gains. He also added that he sees "limited competitive threats slowing the momentum" for the upcoming new 7nm mobile Ryzen chip. With a "strong" back half of 2020 coming on the early ramp of new game consoles from both Microsoft (MSFT) and Sony, Mosesmann believes AMD is poised for multiple expansion.
PRICE ACTION: In late morning trading, shares of AMD have gained more than 4% to $49.88. Over the last year, the stock jumped about 140%. Also outperforming is peer Nvidia, rising over 70% since last January and up 1.5% this morning.
