Advanced Micro Devices (AMD) may start to recover

Yesterday (7/18) the boys at JMP Securities reiterated their "market outperform" rating on Advanced Micro Devices, Inc. (NYSE:AMD) and raised their target price from $15 to $20.

That is a significant Wall Street endorsement for AMD who for the last 5 months has had nothing but tough love from the press and analyst community. We've all read about the battle between Intel and AMD, the question if AMD can recover, and investors have watched their shares trade close to a new 52-week low on a daily basis. AMD shares are up 1.8% today on the news from JMP Securities and with shares trading under $16 -- there is much to gain.

JMP Securities mentioned that the upward revision in the target price for AMD reflects a shift in the base year. Although Advanced Micro Devices is expected to post losses of $0.75 per share for F2Q07, it is likely to have gained share in the low- and mid-range notebook market and is expected to have witnessed a ramp up in new server and notebook chips (according to the analysts). Channel checks indicate that the company’s presence with HPQ, Dell and the new Toshiba and Acer notebooks has strengthened and all of this is making JMP Securities raise their target price.

AMD is not just a runner-up to Intel (INTC), they pulled in $5.6 billion in revenue last year and investors seem to forget about their earning power and only listen to the bad news, clinging to the negative P/E factor. From a big picture perspective, AMD is going to weather the storm and who cares if Intel's earnings are better than AMD -- don't underestimate the potential value that JMP Securities has finally brought to light.

AMD's share price has fallen 26% in the last year, but it has also increased 10% in the last three months. For once, the analysts at JMP Securities got it right.

Article written by: Frank Lara Jr.
Article posted on: July 19th, 2007

Disclaimer: The Author does not own any shares or positions in any of the securities mentioned in this publication.