Goldman analysts acted based on AMD’s valuation. The stock has dropped 13% since Sept. 1.
It recently traded at $79.09, up 3.3%. It had risen 4% year to date through Tuesday. The stock has doubled off its 52-week low of $35.52, set almost exactly a year ago. And it's off 19% from its 52-week high above $94, set in early September.
Goldman analysts, led by Toshiya Hari, lifted their share-price target to $96 from $84.
“The recent correction in the stock … presents a compelling opportunity to participate in what we expect to be a multi-year share gain and margin expansion story,” the analysts wrote in a commentary.
“We see 1) share gains across the personal-computer and server central-processing-unit markets, 2) gross-margin expansion, and 3) [operational expenditure] leverage, driving above-consensus earnings growth.”
“We are raising our fair value for AMD to $67 per share on a probability-weighted basis,” he wrote in a commentary.
“We assess AMD’s stand-alone [minus Xilinx] fair-value estimate at $57 per share, up from our prior $31 estimate.”
As for Xilinx, “we like the deal for AMD, as it is using its rich shares to fund the deal,” Davuluri said.
“We view this deal as a way for AMD to bolster its product portfolio with the leading [field-programmable gate array] franchise to drive growth and better diversify its revenue, as Xilinx products are complementary to AMD.”