AMD shares pop after analyst predicts 'rapidly improving profitability' and 20% rally

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Advanced Micro Devices shot higher Wednesday after one brokerage initiated coverage with a buy rating and said that the company’s earnings per share is set for strong growth.

Nomura Instinet highlighted AMD’s “high revenue growth and rapidly improving profitability” in validating its steep earnings multiple and new $33 price target.

“We think a return to sustainable profitability will help drive Advanced Micro Device’s stock value,” analyst David Wong wrote to clients. “We forecast AMD’s reported GAAP EPS will climb through 2019 and rise meaningfully in subsequent years from roughly breakeven in the March 2019 quarter.”

Wong added that he expects the profit ramp to be so strong that the company should reach earnings per share power of $2.00 or more. The analyst’s price target implies more than 20 percent upside from Tuesday’s close.

AMD was up 4 percent in premarket trading Wednesday.

Nomura also initiated coverage on Intel with a buy rating and a $65 price target, dubbing the company the “world leader in processors for artificial intelligence and autonomous driving.”

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