© REUTERS AMD (AMD) Has ‘Underappreciated Tailwinds’ – BofA
By Sam Boughedda
Ahead of the company’s analyst day, BofA Securities’ analyst Vivek Arya maintained a Buy rating and $160 price target on Advanced Micro Devices Inc (NASDAQ:) Friday, telling investors in a note that consensus views could be underappreciating tailwinds in GMs.
“While AMD’s best-in-class organic growth and share gains are well-noted, consensus could be underappreciating tailwinds in GMs (54% currently vs. our l-t 56-57% forecast and bull-case 60%+) as AMD closes the gap with fabless compute peers that are generating 60-65% GM,” said Arya.
The analyst added that the company could transform to a consistent FCF-generation and return franchise from its current “narrow-perception of just an Intel (NASDAQ:) share displacer.”
“While AMD might keep focus on buybacks n-t, they could consider a modest (sub-1% yield) dividend in the future, attracting new investors,” he added.
Arya said they find AMD compelling and outlined the company’s potential path to a bull-case $9-$10 earnings per share in FY25.
AMD stock has slipped over 2% in early Friday trading.
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