Advance Micro Devices' (AMD) - Get Report message of consistency and innovation has analysts at Cowen bullish on the chip makers prospects as it reiterated its outperform rating while increasing AMD's price target to $100 from $90 per share.
Cowen recently hosted a virtual investor meeting call with AMD CEO Dr. Lisa Su and left the meeting impressed with the company's message of innovation as the company expressed confidence in the continued strength of the PC market.
"Accelerated by the move onto the 7nm TSMC process in 2019 against Intel's delayed 10nm silicon, we believe consistent product execution across the PC, GPU, and server roadmaps can deliver upside to the much higher gross margin targets (40-44% versus 37% today) and material upside," analyst Matthew Ramsay said.
With growing market share opportunity, Ramsay said a $4.00 EPS is reasonable for AMD, and its raised $100 price target is based on a 30x multiple of this figure, discounted back at 10%.
The new price target represents a potential 20% upside from the stock's previous closing price of just below $83 per share. AMD shares were rising 0.4% to $83.13 in morning trading Friday. Shares up 81% year to date.
Ramsay wrote that he's confident in both the PC market and AMD's position in that market.
"Though we initially expected these trends to wane after initial upgrades, household demand for computing has not subsided with Dr. Su noting it appears the PC is becoming a more important computing form factor than before," Ramsay said.
Cowen also says there is a big upcoming gaming cycle with the next generation of video game consoles coming out, allowing room for a new player to challenge Nvidia's (NVDA) - Get Report entrenched GeForce PC gaming chip franchise.