Punk Ziegel Cuts Advanced Micro Devices to Accumulate

Analyst JoAnne Feeney sees lower prices coming soon in the semiconductor market

Punk Ziegel downgraded Advanced Micro Devices (AMD) to accumulate from buy, citing the likelihood that its rival Intel (INTC) will cut prices on the semiconductor products they both sell.

Analyst JoAnne Feeney thinks Intel's inventory struggles are growing. She sees increased risk in AMD revenues over the next few months, as seasonally low demand combines with Intel's inventory buildup at the low-end of the desktop market. She thinks Intel is likely to cut prices at the low end to clear inventory, while AMD may see a drop in unit sales. She cuts her $1.72 2006 earnings per share (EPS) estimate to $1.57 and her $2.19 2007 estimate to $2.17.