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Alex Cho

AMD Earnings Review: J.P. Morgan Raises Price Target from $10 to $11.50

J.P. Morgan analyst Harlan Sur maintained his neutral rating and raised his prior price target from $10.00 to $11.50. He's a little more optimistic than other members of consensus, which is a positive sign.

Harlan mentioned some positive points following the quarterly earnings release to clients of J.P. Morgan today:

Our Dec-17 price target moves to $11.50 taking into account improved revenue and slightly improved profitability profile. However, from a stock perspective we believe AMD’s enhanced competitive positioning and potential market share gains will need to translate to meaningful earnings power for the stock to continue moving higher from here. We remain Neutral AMD.

AMD has been a high flyer over the past year (up nearly 300% in 2016 and up 20% YTD in 2017) on expectations of meaningful earnings power improvement driven by share gains across CPU and GPU, in our view. While AMD appears to be executing on its product roadmap and will likely drive low double-digit % revenue growth this year, we believe sustainable share gains are less certain and we anticipate modest leverage and earnings power during our modeling period.

Harlan was a little more upbeat on AMD than what we had expected. The analyst revised his estimate upwards to reflect some momentum in 2H’17. Though, we believe he’s conservative on his estimate, it’s at least trending in the correct direction, which should be supportive of sentiment when we move through the balance of the year.

That being the case, I want to reiterate my positive stance on AMD, as you can read here.

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