Should You Buy AMD Stock before Analyst Day?

Advanced Micro Devices (NYSE:AMD) stock is trending upward in today’s pre-market trading session. The stock rose by about 2.19% at 6:28 AM ET. On Monday, the stock rose 4.35% and closed at $47.46. At the closing price, the company’s market cap was $55.5 billion. Currently, the stock is trading 19.9% below its 52-week high of $59.27 and 125.6% above its 52-week low of $21.04. On a YTD (year-to-date) basis, AMD stock has returned more than 3.5% as of Monday. In comparison, the S&P 500 Index has lost around 4.35% YTD.

AMD stock upgraded

On Thursday, AMD will host Financial Analyst Day from 1:00 PM–6:00 PM PT (4:00 PM–9:00 PM ET). At the event, Wall Street analysts will look for additional information on the deadly coronavirus scare. Analysts will also look for AMD’s updated long-term financial outlook.

Today, Piper Sandler analyst Harsh Kumar raised the 12-month target price on AMD stock to $56 from $45. The analyst also upgraded the stock to “overweight” from “neutral.” According to a report from TheFly, “The analyst sees AMD’s product set as extremely well positioned to gain share over the next several years. From a product standpoint, AMD is well positioned in its laptop/desktop and data center markets, which have several tailwinds to provide significant growth over the next several years.” Kumar thinks that AMD stock is attractive for long-term investors after the recent fall due to the coronavirus.

On Monday, a Bank of America analyst raised the 12-month target price on AMD stock to $62 from $58. The analyst maintained his “buy” rating on the stock. The new target price implies a 30.6% upside from the stock’s closing price on Monday. According to a report from TheStreet, Bank of America analysts “explained the target-price hike by predicting that management will detail a long-term model that outlines a path to $2 to $2.50 earnings per share. Analysts also say the coronavirus outbreak will pressure AMD’s prior 29% midpoint revenue outlook for fiscal 2020.”

Deutsche Bank has a 12-month target price of $42 and a “hold” rating on AMD stock. According to TheStreet, Deutsche Bank analysts expect “strong product/strategic execution to continue in 2020/21 with tailwinds easing throughout the year. Deutsche Bank said it sees the current stock price as challenging and expects competitive pressure to increase.”

Financial performance in Q4

AMD’s net revenue rose 49.9% YoY (year-over-year) to $2.13 billion in the fourth quarter of 2019. Analysts expected revenue of $2.11 billion. AMD’s Computing and Graphics segment reported revenue of $1.66 billion—a rise of 68.6% YoY. Meanwhile, the company’s Enterprise, Embedded, and Semi-Custom segment reported revenue of $465 million—a rise of 7.4% YoY. AMD’s adjusted EPS was $0.32 in the fourth quarter of 2019, which was better than $0.08 in the fourth quarter of 2018. However, analysts expected an adjusted EPS of $0.31.

AMD expects its fiscal 2020 revenue to grow by 28%–30%. Read AMD Stock Fell Due to Disappointing Guidance to learn more about the company’s performance in the fourth quarter of 2019.

Analysts’ recommendations

Wall Street analysts have given AMD stock a 12-month mean target price of $49.00. The average target price is at a 3.2% premium to the current price of $47.46 on Monday.

Among the 39 analysts tracking the stock, 23 recommend a “hold,” 15 recommend a “buy,” and one recommends a “sell.”

AMD’s stock returns

On Monday, AMD stock was trading 7.3% below its 20-day moving average of $51.18. Meanwhile, the stock is trading 3.6% below its 50-day moving average of $49.24 and 11.2% above its 100-day moving average of $42.69. The stock’s 14-day relative strength index score of 44 indicates that the stock isn’t overbought or oversold.

AMD’s upper, middle, and lower Bollinger Bands are $59.26, $51.18, and $43.10, respectively. The stock closed near the middle Bollinger Band level on Monday, which also shows that it isn’t overbought or oversold.

AMD stock has fallen by 3.4% in the trailing five-day period. Meanwhile, Intel (NASDAQ:INTC) and Micron Technology (NASDAQ:MU) have lost 5.8% and 0.8%, respectively, in the trailing five-day period. The chip stocks fell after Microsoft (NASDAQ:MSFT) cautioned that the coronavirus outbreak would have a negative impact on sales and earnings.

With a PE ratio of 41.39x for this year and analysts expecting AMD’s earnings to grow 79.7%, the stock looks cheap. For 2021, analysts expect the company’s earnings and revenues to rise by 39.1% and 19.5%, respectively.

Read Is AMD Stock Overbought or Worth Buying? and AMD Stock Got a Downgrade: Is There Limited Upside? to learn more. Also, read AMD 2020 Product Ramp Sends Stock to a 13-Year High.