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Advanced Micro Devices Inc. headquarters in Sunnyvale, Calif (MARCIO JOSE SANCHEZ/AP)
Advanced Micro Devices Inc. headquarters in Sunnyvale, Calif (MARCIO JOSE SANCHEZ/AP)

AMD shares surge as analysts upgrade stock to buy Add to ...

Inside the Market’s roundup of some of today’s key analyst actions. This post will be updated with more analyst commentary during the trading day.

Advanced Micro Devices Inc. shares are up more than 10 per cent in late afternoon trading after two analysts upgraded their ratings on the computer chip maker today.

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Merrill Lynch analyst Vivek Arya raised his rating to “buy” from “underperform,” finding encouragement in AMD’s deals to supply processor chips for Sony’s PlayStation 4 and Microsoft’s Xbox One. Both consoles are expected to be released in time for the Christmas shopping season.

Mr. Arya said he believes the deals could turn AMD into a better diversified company with a multi-year recurring revenue stream. He thinks there is considerable pent-up demand for the new consoles and expects AMD to see some financial benefits of the deals by the third quarter.

Canaccord Genuity analyst Bobby Burleson upgraded AMD to a “buy” from a “hold” rating, noting the deals help the company to transition away from a near-exclusive reliance on PC demand, which has been quickly eroding with the popularity of tablets. “Specifically, we believe the embedded opportunity could drive momentum in Q3 as game consoles where AMD supplies custom silicon begin their production ramp ahead of the holiday shopping season,” he said.

Targets: Mr. Arya raised his price target to $6 (U.S.) from $2.50. Mr. Burleson jacked up his to $5 from $3. The average target among analysts is $3.74, according to Bloomberg data.

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This summer’s box office draws will be no match for Bruce Wayne and Peter Parker, who thrilled film goers in the Batman instalment Dark Knight Rises and the Amazing Spiderman in 2012.

And that may mean modest receipts for Cineplex Inc. in the second half of 2013 when compared to last year, said Canaccord Genuity analyst Aravinda Galappatthige.

“The third quarter generally has several blockbuster titles (Dark Knight Rises and Amazing Spiderman – 2012), but this year the biggest title in Q3 is likely to be The Wolverine. Warner Bros.’ Pacific Rim , which initially carried high expectations, is now tracking poorly,” he commented.

But Mr. Galappatthige nudged up his expectations for the stock’s performance, after factoring in the company’s acquisition of theatres from Empire Co. Ltd.

Target: Mr. Galappatthige raised his price target to $31 from $30 and maintained a “hold” rating. The average target is $36.67.

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Endeavour Silver Corp. this week reported better-than-expected production in the second quarter and announced a second review intended to cut company costs.

But Dundee Securities analyst Chris Lichtenheldt downgraded the stock to “neutral” from “buy,” given the uncertain near-term cash flows that will result from volatile metal prices.

Target: Mr. Lichtenheldt maintained a $3.50 price target. The average target is $5.24.

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Aurcana Corp. is finally making progress in the ramp-up of its Shafter silver mine in Texas, which began operations more than a year ago, said RBC Dominion Securities analyst Dan Rollins.

Underground and milling rates ran above 600 tons per day in June and new equipment being installed should eventually get mill throughput up to the designed daily rate of 1,500 tones, he said.

But Mr. Rollins thinks the slow ramp-up, combined with weak silver and base metal prices, will weigh on the company’s share price. “As such, we believe a sector perform rating is warranted,” he said.

Target: Mr. Rollins cut his price target to $2 from $2.25. The average target is $2.20.

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CAE Inc. has received an “impressive” order for nine full flight simulators, nine flight training devices and a 10-year product and service agreement with Etihad Airways valued at $230-million, noted Stonecap Securities analyst C. Scott Rattee.

“The Etihad order illustrates the benefits of CAE’s long term customer relationships,” he commented, as Etihad has been a CAE customer since 2003. “We believe that CAE’s full suite of simulation equipment and pilot/crew training services make it an attractive option for global airlines looking to manage their training requirements.”

Target: Mr. Rattee reiterated a “sector perform” rating and $13.50 price target. The average target is $12.30.

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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @ eyeonequities

Follow on Twitter: @eyeonequities

 
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