AMD: Merrill Cuts to Underperform, Ups ADI to Neutral

Merrill Lynch chip analyst Srini Pajjuri this morning cut his rating on Advanced Micro Devices (AMD) to Underperform from Neutral, while moving Analog Devices (ADI) in the other direction, to Neutral from Underperform.

Pajjuri notes that ADI is down nearly 30 percent since early June; he says the valuation now “mostly reflects our margin and growth concerns.” He notes that the stock trades at 12 times EV/FCF, a discount to other analog chip stocks. He points out that ADI boasts strong free cash flow and a three percent dividend yield, and that ADI has limited exposure to consumer and PC markets

As for AMD, Pajjuri says the change followed a review of his ratings following the call on ADI. “Although we have not changed our fundamental outlook for AMD, we believe it is relatively less attractive than other Neutral rated stocks in its cluster,” he writes.

Read the rest of this post


Must-Reads from other Websites

Panos Mourdoukoutas

Why Apple Should Buy China’s Xiaomi

Paul Graham

What I Didn’t Say

Benjamin Bratton

We Need to Talk About TED

Mat Honan

I, Glasshole: My Year With Google Glass

Chris Ware

All Together Now

Corey S. Powell and Laurie Gwen Shapiro

The Sculpture on the Moon

About Voices

Along with original content and posts from across the Dow Jones network, this section of AllThingsD includes Must-Reads From Other Websites — pieces we’ve read, discussions we’ve followed, stuff we like. Six posts from external sites are included here each weekday, but we only run the headlines. We link to the original sites for the rest. These posts are explicitly labeled, so it’s clear that the content comes from other websites, and for clarity’s sake, all outside posts run against a pink background.

We also solicit original full-length posts and accept some unsolicited submissions.

Read more »