Why Advanced Micro Devices Shares Popped

Before you go, we thought you'd like these...
Before you go close icon

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Advanced Micro Devices climbed 4% today after Wedbush upgraded the semiconductor company from neutral to outperform.

So what: Along with the upgrade, analyst Betsy Van Hees boosted her price target to $5 per share (from $4), representing about 30% worth of upside to Friday's close. While value investors might be turned off by the stock's big jump in the first half of 2013, Van Hees believes that the growth of new gaming consoles and improving demand in the second half of the year should fuel even further price appreciation.

Now what: Wedbush expects AMD to post Q3 EPS of $0.06 on revenue of $1.42 billion, versus the Wall Street consensus of $0.02 and $1.42 billion. "We believe in the near-term AMD will benefit from the ramp of gaming consoles and a modest lift from 2H seasonality and longer-term is well positioned to gain market share in servers with its dual architecture strategy," noted Wedbush. "We believe AMD is back on track to deliver solid Q/Q and Y/Y earnings and revenue growth and recommend investors with a higher risk/reward tolerance to buy the stock." When you couple the stock's hot run -- up 120% over its 52-week lows -- with AMD's extremely intense competitive environment, I'd definitely agree that a strong stomach is required to jump in.

Get great growth
Tired of watching your stocks creep up year after year at a glacial pace? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.

The article Why Advanced Micro Devices Shares Popped originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading