This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Merrill Upgrade Charges AMD

Updated from Nov. 11

Aided by an upgrade from Merrill Lynch, shares of Advanced Micro Devices (AMD - Get Report) were up almost 2% early Friday ahead of the company's annual meeting with financial analysts.

The stock added 31 cents, or 1.7%, to $18.90 in premarket trading.

Merrill analyst Joe Osha upped his rating on AMD from neutral to buy, saying he expects the chipmaker to keep expanding its profit margin and gaining share against Intel (INTC - Get Report) for at least another year.

Osha called Intel's own microprocessor plan "troubled."

"AMD's stock is already up 59% off the bottom, and our shift in stance may look late," acknowledged Osha. But he thinks there's room for more upside, noting that AMD has taken advantage of several strategic mistakes made by Intel.

Chief among them are Intel's decision to focus on clock speed in its Pentium 4 chip. "AMD's Athlon core was designed with less emphasis on raw clock speed and more emphasis on size and efficiency, which in retrospect looks like a smart decision," wrote Osha.

Intel has also been hurt by its late introduction of a server chip able to compete with AMD's popular Opteron silicon, he added.

One potential worry for Sunnyvale, Calif.-based AMD is Intel's renewed aggression in the flash memory business. However, Osha believes that AMD should be able to compensate for share losses there with gains in its higher-margin microprocessor line.

The upgrade from Merrill comes after a similar move on Wednesday from Lehman Brothers' Tim Luke, who hiked his rating on AMD from equal weight to overweight.

He cited similar reasons to those named by Osha, saying AMD should see improving margins from share gains in microprocessors and manufacturing gains, offsetting lower sales in flash.

Both analysts praised AMD's recently announced move to begin sourcing production of 90-nanometer microprocessors from foundry Chartered Semiconductor Manufacturing (CHRT), which should help ensure the company an adequate supply of chips.

Merrill has done recent investment banking for AMD; Lehman has not.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AMD $2.30 0.00%
INTC $32.08 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs