Could AMD’s Q1 Earnings Report Boost Its Stock?

Advanced Micro Devices (NYSE:AMD) will likely report its first-quarter earnings results on Tuesday after the market close. The stock rose 0.5% on April 24 and closed the trading session at $56.18. Notably, the stock was trading 5.2% below its 52-week high of $59.27 and 115.8% above its 52-week low of $26.03. At the closing price on April 24, AMD had a market capitalization of $65.8 billion.

On April 24, the S&P 500 and the Dow Jones rose by 1.4% and 1.1%, respectively. Nvidia (NASDAQ:NVDA) and Intel (NASDAQ:INTC) gained 2.0% and 0.4%, respectively, on the same day. Other semiconductor stocks including Micron Technology (NASDAQ:MU) and Qualcomm (NASDAQ:QCOM) have returned 0.9% and 3.0%, respectively.

AMD’s Q1 and 2020 expectations

AMD expects its revenues to grow by around 42% YoY (year-over-year) to $1.8 billion in the first quarter. The company expects its gross margin to be about 46% in the first quarter, which is higher than 41.0% in the first quarter of 2019. The company’s operating expenses will likely grow by around 16.5% YoY to $580 million in the first quarter.

Wall Street analysts expect AMD to post sales of $1.78 billion in the first quarter—a rise of 40.2% YoY compared to $1.27 billion in the first quarter of 2019. Also, analysts expect the company’s adjusted EPS to rise by 200% YoY to $0.18 in the first quarter.

In the first quarter, AMD will likely report a free cash flow of $411 million. The company’s operating cash flow will likely rise by 142.6% YoY to $516.7 million. Meanwhile, the company’s capital expenditures could decrease by 61.8% YoY to $47.3 million in the first quarter.

Analysts also expect AMD’s revenues to rise by 27.6% in 2020 to $8.59 billion. The sales will likely rise by 20.7% in 2021 to $10.36 billion. The adjusted earnings could rise by around 71.9% in 2020 to $1.10 per share. However, the profits will likely rise by 44.5% YoY to $1.59 per share in 2021.

Analysts’ recommendations for AMD stock

Based on Reuters data, among the 38 analysts tracking AMD stock, 17 recommend a “buy,” 20 recommend a “hold,” and one recommends a “sell.” Analysts’ mean target price on the stock is $50.87, which implies a 9.5% loss from the current level of $56.18. The consensus target price for the stock has risen from $49.53 in March—a rise of 2.7%.

Intel, Micron, and Nvidia have average broker target prices of $62.14, $61.72, and $300.00, respectively. These figures imply returns of 4.9%, 39.8%, and 3.6%, respectively, over the next 12 months.

Peer comparison

Last week, Intel reported its first-quarter earnings results. In the first quarter, Intel reported revenue of $19.8 billion—23.5% growth from $16.1 billion in the first quarter of 2019. The company beat Wall Street analysts’ consensus estimate of $18.7 billion. Intel’s adjusted EPS of $1.45 was above analysts’ estimates of $1.28 per share in the first quarter. However, the company reported an adjusted EPS of $0.89 in the first quarter of 2019. Read Is Intel Stock a ‘Sell’ after Its Q1 Earnings? to learn more.

Qualcomm will release its earnings report for the second quarter of fiscal 2020 on Wednesday. The quarter ended on March 31. Analysts expect the company’s second-quarter reported revenue to rise by 4.0% YoY to $5.1 billion. They expect the company to post an adjusted EPS of $0.79 versus $0.77 in the second quarter of fiscal 2019.

Technical analysis

Based on the closing price on April 24, the stock was trading 10.7% above its 20-day moving average of $50.76. The stock is also trading 16.0% above its 50-day moving average of $48.45 and 18.2% above its 100-day moving average of $47.51.

AMD’s 14-day RSI (relative strength index) score is 62. The score indicates that the stock is approaching “overbought” levels. AMD’s upper, middle, and lower Bollinger Band levels are $60.50, $50.76, and $41.02, respectively. On April 24, the stock closed near its upper Bollinger Band level, which indicates that it’s overbought.

Read Is AMD Stock a Buy or Sell at These Prices?, AMD Stock Rose over 11%: Will the Rally Continue?, and Is AMD Stock a Good Option for Investors Right Now? to learn more.