Valuation Insight via Reverse DCF Analysis

3 months ago

Nick

"Here's an updated reverse DCF. This is just one scenario that we ran to try to gauge what the market has baked into expectations right now for AMD stock. And based on these recent deal announcements, we did decide to tighten the near term growth range down to three years. Free cash flow per share, starting at $3 and 34 cents after the Q3 report. 50% free cash flow per share growth rate for three years, and then a 6% terminal growth rate thereafter. 10% discount rate gets an AMD fair value of about $240 per share, which is what the stock was trading for in after hours following the Q3 update."

The speaker provides a detailed valuation perspective on AMD using a reverse DCF model. By incorporating a tightened three-year near-term growth range and specific metrics such as a 50% growth rate and a 10% discount rate, the analysis suggests that AMD is fairly valued at approximately $240 per share based on the current market conditions and recent strategic announcements.

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