AMD Shares Down 11% Despite Beating the Street and Love from Citigroup (AMD, C, INTC)

Advanced Micro Devices, Inc. (NYSE:AMD) shares are down 11% today trading at $8, even though the company beat the Street with its latest quarter investors aren't convinced the revenue will keep coming in 2010 forward.  However Citigroup (NYSE:C) has a more positive view on AMD and they even hiked their target price.

AMD reported revenue increased 42%to $1.65 billion last quarter on surging sales of personal-computer processors and graphics chips, AMD said in a statement. Analysts had projected $1.5 billion, according to a Bloomberg survey.

AMD expects its sales to decline this quarter from the previous three months, following seasonal patterns. Chip demand typically slows after the year-end shopping surge. The drop is usually between 5% and 10%, Chief Financial Officer Thomas Seifert said yesterday on a conference call.

AMD also reported net income of $1.2 billon largely helped by a legal settlement payment from Intel (NASDAQ: INTC).

CITI LIKES AMD
(AmericanBankingNews.com) Despite AMD's fall today, Citigroup’s (NYSE:C) Equity Research firm raised the target share price of Advanced Micro Devices (NYSE:AMD) to $12.00 from $11.00 and re-iterated the firm’s buy rating on the company, following the release of the semi-conductor maker’s quarterly results.

Citigroup Analyst Glen Young commented that AMD’s 1st quarter earnings results and earnings per share were above the consensus targets, just as Intel’s was.  Young says that Citigroup predicted that could happen in the fourth quarter of 2009 earnings season, however, AMD’s share price may temporarily drop because of 1st quarter declines, but Citigroup’s research firm recommends buying while the share price is depressed.

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Yeng’s research report concluded, “As AMD emerges from the umbrella of its fabs and benefits from cyclical recovery, we expect the leverage discussed above to emerge–it is evident in our 2011 EPS. AMD is currently trading at 14.0x our 2011 EPS of $0.64. We increase our revenue estimates for 2010/2011 to $6,266M/$6,927M from $6,075M/$6,812M, and our EPS estimates to ($0.10)/$0.64 from ($0.62)/(0.48) reflecting higher growth in computing and graphics, higher AMD Product Co margins, and Product Co OpEx . Our price target increases to $12 from $11, based on S&P P/E multiples for companies with 11% revenue growth, and higher 2011 EPS estimate.”

SOURCE: http://www.americanbankingnews.com/2010/01/22/citigroup-nyse-c-analysts-boost-advanced-micro-devices%E2%80%99-nyse-amd-target-to-12/