Equity Research – Advanced Micro Devices (AMD)
A Work Project, presented as part of the requirements for the Award of a Master Degree in Finance from the NOVA – School of Business and Economics. Equity Research – Advanced Micro Devices (AMD) Bruno Filipe Isaías dos Santos - 33867 Filipa Simão Teles - 33881 A Project carried out on the Master in Finance Program, under the supervision of: Rosário André 3rd January, 2020 Abstract Advanced Micro Devices (AMD) is a Silicon Valley-born semiconductor company, that had its IPO in 1972. Despite its rough past, in the most recent years, AMD has been able to gain competitive advantage in relation to its industry peers, as well as market share due to its continuous innovative products’ lines of EPYC and Ryzen processors, and Radeon graphics. Furthermore, recently established partnerships and launched products give the company good growth prospects, in the near future. For these reasons an Equity Research Report was conducted on AMD, in order to get to a fair value of the stock. AMD’s valuation in the report was assessed through the Discounted Cash Flow (DCF) method, considering various factors that could affect the company’s financial statement line items. Among those factors are the Average Selling Price of its products, Units Shipments, Gross Margin, investments in innovation (R&D), and several partnerships alongside with the company’s Market Share. A scenario analysis on the effects of the tariffs, coming from the Trade War, was also conducted on AMD’s price. The price target arrived for December 31, 2020 was $52.75, leading to a BUY investment recommendation, considering normal market conditions.
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