What To Expect From AMD's Analyst Day

Advanced Micro Devices, Inc. AMD stock has pulled back roughly around 23% from the record high of $59.27 it hit Feb. 19 amid the market-wide COVID-19-related pullback.

Investors are likely to look ahead to the company's financial analyst day scheduled for Thursday for the stock's next catalyst. 

Big Navi Rumors Swirl Around

AMD could shed more light on the long-rumored "Nvidia Killer" high-end graphics card, which was referred to as Big Navi by CEO Lisa Su at the CES 2020 in January.

AMD, which has a strong presence in the low- and mid-segments, is striving to break into the high-end, which so far has been the stronghold of rival NVIDIA Corporation NVDA.

Big Navi is likely to be pitched against Nvidia's high-end offerings such as RTX 2080, RTX 2080 Super and RTX 2080 Ti.

AMD Likely To Express Long-Term Confidence  

AMD is likely to issue a confident view of its long-term prospects, especially around share gain opportunity, Morgan Stanley analyst Joseph Moore said in a note.

The analyst expects the company's long-term earnings framework to point to higher gross margin opportunities, but does not see the possibility of a precise EPS target.

Moore said the company could guide to a long-term gross margin of 52% and stable operating expenses as a percent of sales at 26% and zero interest expenses.

AMD could also give a qualitative sense market share, with the exception of servers, where it is targeting a return to 2006 levels of a low-to-mid 20s share, the analyst said. 

"Our EW rating is a function of high valuation. But certainly the factors under AMD's control are going well, and we expect that to be clear from this meeting," according to Morgan Stanley. 

Related Link: Why AMD's Coronavirus Impact Could Be Worse Than Intel, Nvidia

BofA Expects EPS Plan

AMD is expected to detail a new long-term financial model, outlining the path to $2-$2.50 in EPS, BofA Securities analyst Vivek Arya said in a note.

The expectation is premised on the fact that AMD previously issued a financial model in 2017, and with the company at or near most of these targets, it is likely to set a higher bar, the analyst said. 

Arya expects 24% year-over-year growth for AMD's processors in 2020, even with anticipated share gains vs. Intel Corporation INTC, vis-à-vis the company's previous estimate of 29% growth, as the total addressable market for processors shrinks due to the COVID-19 outbreak.

"Overall, we remain positive on AMD as it's still in prime position to capture increasing value share in some of the most valued computing markets in semis," according to BofA. 

Wells Fargo Anticipates Long-Term Bullishness 

AMD is expected to issue measured near-term commentary, while sounding bullish on the long-term model, Wells Fargo analyst Timothy Arcuri said in a note. 

The analyst said server processor market share gains north of 25% are possible, even with Intel's improvements in the 7nm process window, as AMD's architecture still provides cost/performance advantages.

AMD is also uniquely positioned to address high-performance bottlenecks, Arcuri said. 

Notwithstanding the coronavirus impact, momentum is building as competitive advantages trickle down to DT/Mobile, the analyst said. 

"All told, the roadmap biases GMs higher (>50%), F2023 EPS >$2.50 target and a path to ~$3/share looks achievable."

AMD shares were up 4.35% at $47.46 at the close Monday. 

AMD Ratings

Morgan Stanley has an Equal-weight rating on AMD.

BofA reiterated a Buy rating and lowered the price target from $62 to $58.

Wells Fargo maintained a Neutral rating and $52 price target.