Semiconductor giant Intel (NASDAQ:INTC) is set to release its second quarter Fiscal 2023 results on July 27 after the market closes. Analysts prefer to remain on the sidelines on INTC stock, giving it a Hold consensus rating as macro headwinds persist. Nonetheless, INTC stock is up 29.7% year-to-date.
The chipmaker’s performance is being impacted by the continued slump in the demand for personal computers (PCs). Even so, inventory adjustments from PC sellers could push the industry back into business. Intel’s chips, microprocessors, flash drives, and other storage products are used in PCs, and the post-pandemic lull in demand for electronic gadgets has hurt the overall chip industry.
Additionally, stiff competition in the chip sector owing to the artificial intelligence (AI) boom is also eating into Intel’s share. Plus, the tough macro backdrop continues to challenge the market. To gain an edge in the semiconductor space, Intel is pivoting to becoming a foundry player, wherein it will start producing chips for other semiconductor players.
Here’s What Analysts Expect from Intel
Wall Street expects Intel to post an adjusted loss of $0.04 per share, falling significantly from its prior-year quarter adjusted profit of $0.29 per share. Similarly, quarterly revenues are expected to fall 20.8% year-over-year to $12.12 billion. However, the revenue expectations do show a modest sequential increase over Q1 of 2023.
Recently, Mizuho Securities analyst Vijay Rakesh raised the price target on INTC to $33 (3.2% downside potential) from $30 while maintaining a Hold rating. The analyst’s new price target is based on a 20.6x multiple of his Fiscal 2024 expected earnings.
Although Rakesh believes that Intel has a leadership position in the PC market, Data Center hurdles will persist as the firm struggles with competition. Also, its gross margin is expected to remain compressed, owing to investments related to new node ramps and the foundry business, Rakesh added.
Moreover, ahead of Intel’s Q2 print, Stifel Nicolaus analyst Ruben Roy reiterated a Hold rating with a price target of $28, implying 17.9% downside potential.
Roy expects Intel to report revenue that’s in line with or slightly above the consensus estimate. Plus, the five-star analyst expects a marginal improvement in its gross margin in Q3. Having said that, capacity underutilization and inventory reserves on new products will likely impact margins through the first half of 2024, Roy added.
Technical Indicators Ahead of INTC’s Q2 Earnings
Heading into Q2 results, technical indicators reveal a Strong Buy on Intel. According to TipRanks’ easy-to-understand technical tool, INTC’s 50-Day EMA (exponential moving average) is 32.48, while its price is $34.10, making it a Buy. Similarly, INTC’s shorter duration EMA (20-day) also signals that it is a Buy.
Is Intel a Buy, According to Analysts?
On TipRanks, Intel stock has a Hold consensus rating based on four Buys, 18https://www.tipranks.com/stocks/intc/forecast Holds, and six Sell ratings. The average Intel stock price target of $32.17 implies 6.4% downside potential from current levels.
Insights from Options Trading Activity
TipRanks now presents options activity to help investors plan their trades ahead of earnings releases. Options traders are pricing in a 7.04% move on Intel’s earnings. The anticipated move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
