Advanced Micro Devices to Acquire Rival Xilinx for Over $30 Billion; Target price $120 in Best Case

American chipmaker Advanced Micro Devices (AMD) is in advanced talks to acquire its rival semiconductor manufacturing company, Xilinx, valued at over $ 30 billion, the Wall Street Journal reported, citing people familiar with the matter.
According to the WSJ, both chipmakers are discussing a deal that could come off as early as next week. However, there is no guarantee that they will close the deal for sure.
AMD's shares fell 2.5% to $ 84.33 on the Friday ahead of trading. However, this year the stock is up about 90%.
Stock Forecast for Advanced Micro Devices (AMD)
25 analysts are forecasting the average price in 12 months at $ 83.78 with a high forecast of $ 120.00 and a low forecast of $ 62.00. The average target price corresponds to a decrease of -3.16% compared to the last price of USD 86.51. Of these 25, 12 analysts rated “buy”, 12 “hold” and one “sell” according to Tipranks.
Morgan Stanley's target price is $ 73 with a high of $ 95 in a bull scenario and $ 39 in a worst-case scenario. Jefferies raised its stock price forecast for Advanced Micro Devices from $ 95 to $ 100. Deutsche Bank raised its target price for Advanced Micro Devices from 50 to 70 US dollars and gave the company a “Hold” rating in July.
Other equity analysts recently updated their equity outlook. In July, Barclays raised its target price for Advanced Micro Devices from USD 50 to USD 55 and gave the company an "equal weight" rating. Finally, the Royal Bank of Canada raised its target price from $ 71 to $ 84.
Analyst view
"Advanced Micro Devices (AMD) continues its product roadmap as Intel sees delays in process technology on 10nm servers and delivery bottlenecks at the lower end of the PC market," said Joseph Moore, equity analyst at Morgan Stanley.
Zen continues to increase AMD's stake as we estimate the company will gain a stake in desktop, notebook and server processors in 2020 and 2021. We model computer and graphics sales of $ 5.9 billion (up 25.9% year over year) and enterprise, embedded and semi - customer sales of $ 3 billion (up 46.5% year over year). "
Upward and downward risks
Advantage: 1) The profit from PC and Zen servers increases as Zen acceptance increases. Intel's competitive response at 10nm is less impressive than expected. 2) The console cycle is stronger than expected - highlighted by Morgan Stanley.
Disadvantage: 1) The server CPUs from Intel for 2020 (Cooper Lake in 1H on 14 nm and Ice Lake in 2H on 10nm) suppress the dynamics of AMD and allow it to regain its share. 2) AMD loses graphics sharing to NVIDIA. 3) The console cycle is lagging behind expectations.
This article was originally published on FX Empire
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