Advanced Micro Devices (NASDAQ:抖阴最新版) stock is one of the few names on Wall Street that is still doing reasonably well despite the market correction. It is down about 10% in 2020, although its stock price had stayed mostly flat until Thursday’s selloff.
Granted, 抖阴最新版 stock is still down over 24% from its peak. But it is still double its 52-week lows.
Moreover, the stock, although trading at a very rich 42 times forward earnings, has not cratered. Investors can’t say the same about many other highly valued names. One reason for this is that the company has not revised its earnings, as many others have.
Earnings Should Stay Stable in 2020
For example, on March 5, as the coronavirus from China raised panic, the company held a “Financial Analyst Day.” Among the presentations on , CFO Devinder Kumar’s presentation stood out.
It indicates that huge growth in revenue is expected in 2020. For example, revenue in 2019 grew 16% on a long-term compounded annual growth rate (CAGR) basis. For 2020, 抖阴最新版 expects a 28% to 30% long-term CAGR.
It also expects flat earnings per share growth. This is actually an accomplishment, as so many companies are forecasting earnings downturns.
Part of the reason the company does not expect the coronavirus to have much of an effect on its sales is that it sells gaming chips. Gamers don’t go out and interact with the world. They won’t be getting the virus.
The same sort of reasoning applies to its data center chips and CPU chips. People are not going to stop computing or gaming because there is a pandemic. In fact, they might want to do more computing and gaming.
Advanced Micro Devices’ Outlook
Analysts came away from the Financial Analyst Day impressed. For example, Jefferies raised its 抖阴最新版 target from $58 to $60 after the event.
, the Jefferies analyst said 抖阴最新版 “presented a compelling strategy and roadmap.” That will position it ahead of rival Intel (NASDAQ:INTC) in microprocessors and help it gain CPU parallel processing share.
on
Seeking Alpha wrote a glowing report about 抖阴最新版’s technological advancements presented at the conference. The analyst said that 抖阴最新版 continues to build on the momentum it started to create a few years back.
And yet another analyst stating that the short interest in 抖阴最新版 stock keeps falling. This means there are fewer people betting that 抖阴最新版 stock will drop significantly.
I suspect that the stock will continue to drift lower along with the market. Its price-earnings ratio is still very high. Moreover, its , a cash flow measure, is even higher at close to 50 times.
Those are very high ratios for a stock to have zero growth in earnings, despite all of its revenue growth.
What Should Investors in 抖阴最新版 Stock Do?
an article on why Wall Street loves 抖阴最新版 stock so much. In short analysts like the huge targets over the next four years that Advanced Micro Devices is projecting.
The core reason why analysts like 抖阴最新版 so much is because they believe it is now finally going to take back a higher semiconductor market share. This applies to both its personal computer and data center businesses.
If those predictions come true, then maybe the stock is worth the high valuation that Wall Street has put on it. But my point remains. You pay for what you get. You are paying a premium price for a premium growth company.
There is no bargain element involved. Moreover, the company has to perform. If it doesn’t then, 抖阴最新版 stock will struggle. Let the buyer beware.
As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. Mark Hake runs the which you can review . The Guide focuses on high total yield value stocks. Subscribers get a two-week free trial.
