Advanced Micro Devices, Inc. (NASDAQ: AMD) is climbing early on in the market this morning after long-time bearish analyst, Morgan Stanley, walked back its bearish views. The change in opinion caused the stock to head up. AMD is now up more than 5% and looks like it may continue climbing.
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Morgan Stanley Walks Back Bearish Views On AMD Stock
In a note to investors, Morgan Stanley’s analyst, Joseph Moore, walked back the bearish opinion that the firm has held on the stock. In the note, the analyst upgraded the stock to equal-weight from underweight. The analyst also increased the price target on the stock from $17 to $28. Here’s a key snippet from the note on AMD:
While our earnings concerns over the last 12 months have played out and 2H numbers still look high, the table is set well for 2020 and there are positive near-term catalysts. We still think there is too much short-term optimism, but we struggle with catalysts to remain underweight.
This year alone, AMD is up by around 60%. Nonetheless, Mr. Moore was clear that the bearish views have been the wrong call following recent movement. Here’s what he said to that end:
…being cautious on the stock has obviously been the wrong call.
Morgan Stanley Is Still Too Cautious Here
In my view, Morgan Stanley is still beeing too cautious here. While the stock is rated as an equal weight stock, I believe that we’re going to see more strong gains ahead, making it well worth a buy.
Interestingly, there seems to be no mention of recent news, which has the potential to catipult the stock to new heights. Let’s not forget, AMD recently announced that it has entered into a licensing agreement with Samsung, a move that many are calling a match made in heaven for mobile gaming.
While growth in AMD is likely to continue, this agreement could put boosters on the company’s revenue, making it fly even further. Think about it, Samsung is one of the world’s largest producers of smartphones. At the moment, it is paying AMD licensing fees for the use of its IP in the development of new products. Once these products hit the market, AMD will receive royalties on sales, which could prove to be a very big deal.
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The Bottom Line
The bottom line here is a simple one. Even the most bearish analysts and investors on AMD have been changing their views as the company continues to take more marketshare in the microchip and graphics processing market. Should this continue, the recent impressive gains on the stock could prove to be just the tip of the iceberg.
What Do You Think?
Where do you think AMD stock is headed moving forward? Join the discussion in the comments below!