AMD Stock Higher as Bank of America Sees 'Top Catchup Candidate'

Advanced Micro Devices  (AMD) - Get Report shares rose Friday, after Bank of America designated the semiconductor maker a “top catchup candidate.”

Bank of America analyst Vivek Arya has a buy rating and $135 price target on the Santa Clara, Calif., company. 

Advanced Micro is trading at a big discount to its competitors, he noted.

AMD has “the strongest upward [earnings-per-share] revisions among chipmakers  and a clear path to doubling EPS to about $5 per share.”

He also expects AMD to gain market share from Intel  (INTC) - Get Report, which is distracted by expanding into the noncore foundry market.

The stock recently traded at $109.94, up 3.2%. It has gained 14% over the past six months amid the global chip shortage.

AMD sits among Bank of America's top three chip picks, along with Nvidia  (NVDA) - Get Report and Marvell Technology  (MRVL) - Get Report.

A couple weeks ago, TheStreet.com Founder Jim Cramer said AMD is "pantsing" Intel, the largest U.S. semiconductor seller.

Morningstar analyst Abhinav Davuluri puts fair value at $109 for AMD.

“We’re raising our fair value estimate for narrow-moat AMD … from $101 on a probability-weighted basis, as we await AMD’s acquisition of Xilinx  (XLNX) - Get Report,” he wrote last month.

“We assess AMD’s stand-alone fair value at $98 per share (up from $91). We assign a 75% probability of AMD’s acquisition of Xilinx closing, and our fair value for the combined entity would be $112 per share.”

Further, “management is confident in the firm’s product pipeline for 2021 and now expects 60% revenue growth for the full year (up from 50%),” Davuluri said. “We believe this guidance should be easily attainable.”

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