Bull Note Props Up AMD Ahead of Q1 Earnings

The options pits have been bearish ahead of the event, however

Digital Content Manager
Apr 26, 2021 at 3:30 PM
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The shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) are up 3.3% at $85.48 this afternoon, after the semiconductor name earned a price-target hike from UBS to $95 from $92. The bull notes comes ahead of the security's first-quarter earnings report, due out after the close on Tuesday, April 27. Below, we will take a look at how the stock has performed on the charts of late, and explore some of the stock's previous post-earnings moves.  

The last few months have been rocky for Advanced Micro Devices stock. Shares have been trending lower after the security hit a Jan. 11, all-time high of $99.23. However, it seems as though AMD found a footing at the $78 mark, while today's pop pushed it past overhead pressure at the $84 mark. Year-over-year, the equity is up about 52%.


A look at the equity's history of post-earnings reactions over the past two years shows a generally negative response. During its last eight reports, six of these next-day sessions were lower, including an 10.1% drop in July 2019. The security averaged a post-earnings swing of 5.7% in the last eight quarters, regardless of direction. This time around, the options market is pricing in a much bigger move of 10.1%.

Analysts were already optimistic towards the equity coming into today, with 18 of the 27 in coverage carrying "buy" or better rating, while the remaining nine said "hold." Plus, the 12-month consensus price target of $102.50 is a whopping 19.9% premium to current levels.

Meanwhile, shorts are starting to hit the exits. Short interest fell 2.5% in the most recent reporting period, though the 81.56 million shares sold short still make up 7.6% of the stock's available float. 

The options pits do not echo that optimism, with puts popular. This is per Advanced Micro Device's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 87th percentile of the past 12 months. In other words, long puts are being picked up at a quicker-than-usual clip.


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