AMD Zooms on Earnings

Sunnyvale, California-based semiconductor manufacturer Advanced Micro Devices (AMD, $6.70, up $0.86) surged 14.73% on continued optimism following its 2nd quarter surprise earnings beat and bullishness on the company’s future products. Some investors speculated that the company could be an acquisition target, especially by Chinese buyers. In April, the company sold majority stakes in two Asian operations sold for over $371 million.

On July 21, the $5.32 billion company reported 2nd quarter results that beat on earnings and revenue, and the company gave a bullish forecast. It reported earnings per share (EPS) of -$0.05 on $1.02 billion in revenue, compared to EPS of -$0.17 on $942 million in revenue a year ago. Analysts had expected EPS of -$0.08 on $951.29 million in revenue.

For the 3rd quarter, which it reports on October 27 after the close, the company expects revenue to increase 18% from the 2nd quarter with a margin of error of 3% ($1.18-$1.24 billion). Analysts are expecting EPS of -$0.02 on $1.12 billion in revenue, compared to EPS of -$0.17 on $1.06 billion in revenue a year ago. For full year fiscal 2016, analysts estimate EPS of -$0.24 on $4.03 billion in revenue, compared to EPS of -$0.09 on $4.24 billion in revenue in 2015. Analysts give the stock a 1-year price target of $5.13, but that could head higher. High target is $8.50. The stock has no trailing PE, no forward PE, PEG of 0.11, price/sales of 1.37, and a current ratio of 1.59. Short interest is 11.78%, which means that shares could see a short squeeze on good news.