Zacks Investment Research upgraded shares of Advanced Micro Devices (AMD) from NEUTRAL to OUTPERFORM on July 19, 2013, with a target price of $5.50.
AMD is the second largest producer of microprocessors, GPUs and chipsets in the world. Its second quarter earnings were better than the Zacks consensus estimates, driven by solid execution and cost control management. Also, the company provided an upbeat third quarter guidance, indicating strong growth ahead. But at the same time, Intel remains a strong competitor with superior strategy, technological prowess and the clout that may be expected of the market leader. While AMD may be able to carve out its own niche, its cash burn rate and significant leverage indicate that it is fast running out of time. Competition from ARM is also expected to increase. Of course, its new products, strength in graphics, increase game console wins advancements in 32nm manufacturing and position in China remain positives. We are reiterating our Outperform rating on AMD shares.
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