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AMD Stock: Are Analysts’ Target Price Revisions Justified?

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Advanced Micro Devices (NYSE:AMD) stock fell 4.0% on Thursday and closed the trading day at $48.11. At this closing price, the company’s market capitalization is about $56.3 billion. The stock is trading 18.8% lower than its 52-week high of $59.27. Also, the stock is trading 128.71% higher than its 52-week low of $21.04.

On Thursday, during its 2020 Financial Analyst Day, AMD provided an update for investors.

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AMD’s Q1 outlook

During its 2020 Financial Analyst Day, AMD reiterated its outlook for the first quarter of 2020. The company’s first-quarter revenue guidance range is $1.75 billion–$1.85 billion. For the first quarter, Wall Street analysts’ consensus revenue estimate is $1.79 billion. The company said that its revenue outlook for fiscal 2020 remains unchanged.

According to a MarketWatch report, “Overall, AMD looks to be going for a growth play with a 20% CAGR commitment, a massive uptick over the 14% CAGR the past 5 years.” The report also said, “Most of that growth will come from data center CPUs and GPUs.”

Analysts’ recommendations for AMD stock

According to the latest recommendations from 39 brokerage firms surveyed by Reuters, 15 or ~38.4% of the analysts recommend a “buy” for the stock, 23 or ~59.0% recommend a “hold,” and one or ~2.6% recommend a “sell.”

Analysts have an average target price of $49.47 on AMD. The target price implies a return of 2.8% based on the closing price of $48.11 on Thursday. The consensus target price for the stock has risen from $48.19 in February—a rise of 2.7%. The lowest target price estimate is $8, while the highest is $66.00.

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Today, a Jefferies analyst increased its target price on AMD stock from $58 to $60. On the same day, a Susquehanna analyst raised its target price on the stock from $50 to $55. Deutsche Bank raised its target price on the stock from $42 to $50, while Piper Sandler raised it from $56 to $58. Mizuho analyst Vijay Rakesh reiterated a “buy” rating on AMD stock with a target price of $55. Nomura Instinet analyst David Wong also reiterated a “buy” rating with a target price of $58.

Craig-Hallum analyst Christian Schwab upgraded AMD stock to “buy” from the earlier rating of “hold.” The analyst increased its target price on the stock from $48 to $60. According to a report from TheFly, the analyst cited “a multiyear product road map in place and a line of sight to continued material topline and EPS growth. In a research note to investors, Schwab says the company provided an updated long-term model which he thinks can drive annual EPS power of $2.00 by 2022.”

Atlantic Equities analyst Ianjit Bhatti upgraded AMD stock to “overweight” from the earlier rating of “neutral.” The analyst increased its target price on the stock from $37 to $60.

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Stock performance

AMD stock closed 11.1% above its 100-day moving average of $43.29 on Thursday. However, the stock was 5.8% and 2.9% below its 20-day and 50-day moving averages of $51.06 and $49.56, respectively. AMD’s 14-day MACD is -2.23, which implies a downward trading pattern. With a 14-day relative strength index score of 47, the stock isn’t oversold or overbought.

AMD has an upper Bollinger Band level of $59.33. The company’s middle Bollinger Band level is $51.06, while its lower Bollinger Band level is $42.80. On Thursday, AMD stock closed near its middle Bollinger Band level, which indicates that it isn’t oversold or overbought.

In the fourth quarter of 2019, AMD reported an adjusted EPS of $0.32 on net revenue of $2.13 billion. In the first quarter of 2020, the company will likely report an adjusted EPS of $0.18, which would represent a rise of 200% on a YoY basis. Meanwhile, analysts expect the company’s total revenues to increase by 41.0% YoY to $1.79 billion in the March quarter.

AMD stock has gained 104.7% in the last 12 months. In comparison, the S&P 500 Index has risen by 10.0%. Intel (NASDAQ:INTC) and Nvidia (NASDAQ:NVDA) have gained 6.1% and 74.6%, respectively, in the last 12 months. Qualcomm, Micron (NASDAQ:MU), and Broadcom (NASDAQ:AVGO) have returned 46.8%, 34.3%, and -1.1%, respectively.

AMD stock is trending upward in today’s pre-market session. The stock rose by 2.6% at 7:37 AM ET. Read AMD Stock Rises Due to Analyst Upgrade: Will It Continue? and AMD Stock Fell Due to Disappointing Guidance to learn more.

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