Bank Of America Downgrades Advanced Micro Devices Amid 'Weak' Guidance, Shares Tumble
In a note released Friday morning, Bank of America analyst Vivek Arya downgraded shares of Advanced Micro Devices (NYSE: AMD) from Neutral to Underperform following Thursday's release of its second-quarter results and third-quarter guidance. Additionally, Arya has cut the price objective from $4.50 to $4.00.
"While management has done a good job of strengthening the balance sheet and winning critical business with major console customers, we believe the legacy PC/graphics market continues to be a material headwind," wrote Arya.
In addition to legacy PC/graphics, Arya said Advanced is suffering from "negligible" exposure to enterprise PC and some growing class of consumer PCs, i.e. Chromebook.
Looking to third-quarter guidance, Arya noted the company is forecasting $1.47 billion in sales compared to consensus expectations of $1.57 billion and a roughly flat second half for console units compared to the first half. This again is a disappointment, as the Street was looking for a ramp in the second half.
Following the Bank of America downgrade, shares of Advanced Micro Devices have dropped ~$0.80 or ~18 percent in Friday's pre-market session.
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