Wednesday, July 14, 2010

Advanced Micro Devices (NYSE:AMD): Cautious comments ahead of #'s - Morgan Stanley

Morgan Stanley is out with an interesting call on Advanced Micro Devices (NYSE:AMD) saying they believe the share price will fall relative to the industry over the next 15 days.

Research Tactical Idea:

After the market close, INTC reported revenues that beat the high end of guidance, which was driven by a 13% QoQ increase in Intel's Data Center (Server) revenues vs PC Client revenues that grew at 2% QoQ. We believe this confirms our view that data points around the consumer appear weaker than the enterprise market, and supports our UW rating on AMD, which has ~80% consumer exposure. Additionally, we believe that competitor Intel has stronger MPU server products, which may have translated to share loss for AMD during the JunQ. AMD is scheduled to report earnings this

Thursday, July 15, and we expect AMD results to compare unfavorably to INTC's. We estimate that there is about a 60% to 70% or "likely" probability for the scenario. Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the scenario.

Stock Rating: Underweight
Industry View: Cautious

Notablecalls: AMD is up this morning in reaction to Intel's better than expected numbers. Morgan Stanley is calling for weak quarter on AMD's part, which could indeed pressure the stock today.

The S&P has gone up ~7% over the past 7 days and feels a bit extended.

Worth keeping AMD on your radar early on. Bit of a contrarian call. I see it giving up at least some of the early gains and heading toward $7.75 level today. Let's see how it works out.

No comments: