The semiconductor giant Intel (INTC) is set to release third-quarter 2021 earnings on October 21.
Over the past six months, shares of the company have lost 14%, and is now trading at over $54. Strong earnings should boost Intel stock, so let’s see what analysts are forecasting.
Analysts, on average, expect Intel to post earnings of $1.11 per share and revenues of $18.24 billion for Q3.
Meanwhile, the Earnings Whisper number, or the Street’s unofficial view on earnings, stands at $1.18 per share. (See INTC Dividend Date and History on TipRanks)
Intel’s Prior Quarter Snapshot
Intel had a strong second quarter, with sales and profitability up over the year-ago quarter.
Revenues of $18.5 billion were up 2% from the year-ago quarter and above-average forecasts of $17.8 billion. Meanwhile, earnings came in at $1.28 per share, up 12% year-over-year and above the average forecast of $1.06 per share.
In terms of cash flow, Intel generated $8.7 billion in Q2 and paid out $1.4 billion in dividends.
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Points to Watch
During the second quarter, the firm provided strong expectations for Q3 and the rest of FY21. For Q3, the firm expects adjusted sales of $18.2 billion and adjusted EPS of $1.10 and for full-year, it upped its sales forecast to $73.5 billion and EPS projection to $4.80.
On the plus side, the firm has a number of innovative CPUs (central processing units) in the works, including the Alder Lake and Sapphire Rapids processors. Unfortunately, Sapphire Rapids’ release has been postponed until early next year. Investors are anticipating the company’s providing further information about the processor roadmap, such as when these processors will be ready for commercialization.
Additionally, given the high demand for Intel CPUs in laptops and data center servers, in concordance with a semiconductor shortage, it will be fascinating to see if the firm is able to meet its financial goals. In the second quarter, PC shipments showed signs of slowing down, and this trend is likely to continue in the third quarter. A prolonged semiconductor chip scarcity remains a serious issue.
In response to the same, Intel’s Chief Financial Officer George Davis said the company’s Q2 conference call, “We expect supply shortages to continue for several quarters but appear to be particularly acute for client in Q3.”Increased competition from AMD, as well as a delay in the delivery of the company’s next-generation Sapphire Rapids Xeon-SP CPUs, are also worries.
Investors are looking forward to more information on PC demand in Q4 and 2022, as well as an update on supply limitations across the sector.
Analysts’ Recommendations
Ahead of the Q3 earnings release, Bank of America Securities analyst Vivek Arya maintained a Sell rating with a price target of $52. This implies 4.5% downside potential to current levels.
Arya is concerned about Intel’s significant reliance on the personal computer market, as well as rising competition from Advanced Micro Devices (AMD).
He stated, “While 2020 and 2021 were anomalies, the PC market is very mature and typically a slow- or no-growth industry, a particular headwind to growth for INTC since they don’t have the unique share gain story driving upside, like with AMD PC sales.”
On TipRanks, Intel stock commands a Hold consensus rating, based on 7 Buys, 10 Holds, and 7 Sells.
As for price targets, the average INTC price target of $60.43 implies 10.9% upside potential from the current levels.
Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
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