Monday, June 25, 2007

AMD (NYSE:AMD): ThinkEquity positive

ThinkEquity's Eric Ross thinks Advanced Micro Devices (NYSE:AMD) is seeing a better quarter thananalysts and investors expect, and he believes this will drive shares higher next month, when it is expected to report. Higher notebook mix (even at the lowend) drives higher ASPs and better margins than expected. The firm upgraded AMD on May 15 because theyheard it was gaining share back; they continue to hear of better margins and ASPs. Mr. Ross expects this momentum to continue through 2007. Reiterates $19 price target and believes it could be a near-term event.

Street consensus is for $1.26b and ($0.85), and ThinkEquity expects $1.35b and ($0.64).Importantly, we expect gross margins to improve from 29% to 34% Q/Q; which they believe investors should view very positively. The biggest drivers are share gains (Dell and Toshiba) and higher ASPs due to a better mix of notebooks.

Notablecalls: Well, Eric's the man! I think AMD goes higher from here. At least in the s-t as the chart shows signs of bottoming. Thursday's big gain followed by a breather on Friday sets stage for a nice upside move.

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