Advanced Micro Devices (NASDAQ: AMD) suffered a bad month on the markets in March. After failing to hold $12 a share, sellers took control of the stock. The 16.6 percent short float is getting more profitable as a bear trade as analysts gang up against the company in transition. For the time being, AMD’s competitive mobile and desktop CPU, Graphics Card division, and EPYC server chips will not get any recognition from the markets. Intel (NASDAQ: INTC) gets to stay the favorite. At a 16.6x P/E and paying a dividend yielding 2.3 percent, Intel, up 5.66% in March, will outshine AMD.
Selling in shares of AMD accelerated when a nearly five-star ranked analyst at Susquehanna called AMD stock a ‘sell’ and set a $7.50 price target. The average price target for AMD stock is $15 a share, with the highest coming from four-star analyst Hans Mossesmann at Rosenblatt.
Catalyst is Month Away
Traders could set-up a bearish enough low for the stock that value investors will buy up the stock ahead of AMD’s earnings report set for May 1 after the market closes. At a forward P/E of 19 times, markets expect earnings growth of 38 percent next fiscal year. This sounds impossible when sales in the last five years fell flat (at negative 0.3%). But Epyc, Ryzen 2, Ryzen for mobile, semicustom chip refreshes for PlayStation and Xbox, plus Polaris and Vega GPUs will all give AMD’s revenue a sharp lift in 2018 and beyond.
Disclosure: Author owns shares of AMD.
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