Chip Stock Presents Solid Entry Point, Says Analyst

There's room for more analysts to turn bullish

Deputy Editor
Feb 9, 2022 at 1:48 PM
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Advanced Micro Devices, Inc. (NASDAQ:AMD) is up 2.7% to trade at $131.70 at last check, after a bull note from Daiwa Capital Markets. The firm upgraded the chip concern to "buy" from "outperform," with a price-target hike to $150, citing its January pullback as an intriguing entry point. The analyst also noted the pending acquisition of Xilinx (XLNX) and a sunny forecast for chip in both 2022 and 2023.

The aforementioned pullback brought AMD within a chip shot of $99, to trade at its lowest level since July. Today's positive price action, meanwhile, has the equity pacing for a close above the 30-day moving average, which is a trendline that has pressured AMD for most of 2022. Over the last 12 months, Advanced Micro Devices stock has added 44.8%.

AMD Chart Feb 9

There is plenty of room for more analysts to change their minds. Of the 22 in coverage, nine brokerages still call AMD a tepid "hold." Meanwhile, the 12-month consensus price target of $153.81 is a 16.8% premium to the stock's current perch.

A shift in the options pits could help the security move higher as well. This is per Advance Micro Devices stock's 50-day put/call volume ratio over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all but 5% of readings in its annual range. This indicates a strong appetite for puts of late.

It's also worth noting the equity's Schaeffer's Volatility Scorecard (SVS) stands at a relatively high 72 out of 100. This means AMD has exceeded options traders' volatility expectations during the past year.

 

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