Options Bulls, Analysts Unfazed by AMD's Mixed Earnings

AMD's current-quarter guidance came in below estimates

by Patrick Martin

Published on Jan 29, 2020 at 10:17 AM
Updated on Jan 30, 2020 at 8:45 AM

Chip name Advanced Micro Devices, Inc. (NASDAQ:AMD) took its turn in the earnings confessional this morning, and the results were all over the place. The company reported adjusted fourth-quarter earnings of 32 cents per share on $2.13 billion in revenue, both of which topped analyst estimates. However, AMD's revenue forecast for the first quarter came in well below estimates due to weak demand from console makers Sony (SNE) and Microsoft (MSFT). All of this adds up to the stock being down 6.3% to trade at $47.37 this morning, on track for its worst single-session loss since August.

Despite the mixed results, analysts were pleased. No fewer than seven have hiked their price targets, the highest coming from Jefferies to $58 from $56. The analyst in coverage at J.P. Morgan Securities expects AMD to build its client and CPU market share this year, pulling even with rival Intel (INTC). 

The flurry of bull notes comes of no surprise though, considering 13 out of 22 rated AMD a tepid "hold" going into today. Plus, the consensus 12-month price target of $46.38 is a 8.4% discount to last night's closing perch of $50.53.

Advanced Micro Devices stock nabbed a record high of $52.81 last Friday, Jan. 24. The shares have more than doubled in the last 12 months, and even today's damage is being contained by their ascending 30-day moving average; a trendline not toppled since mid-October.

We covered AMD's recent options activity earlier this week. Today it's more of the same, despite the negative price action. In just the first hour of trading, 106,000 calls have changed hands, four times the average intraday amount and more than double the number of puts traded. The most popular so far is the weekly 1/31 47-strike call, where new positions are being opened.

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