It’s been a good year for Intel (NASDAQ:INTC) investors and a welcome change after what has been a difficult several years for the stock and company. Even after a recent downturn, the shares are up by 38% year-to-date.
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Those gains were helped along by strong second-quarter results that beat estimates and displayed signs the PC market was in recovery mode. With the chip giant readying to release its Q3 results (Thursday, Oct. 26), Deutsche Bank analyst Ross Seymore thinks that trend is about to continue.
“We generally expect INTC to deliver a solid 3Q/4Q report/guide, with cyclical pressures somewhat lessening in Data Center, still persisting in networking/edge/ FPGAs, and beginning to reverse in PCs,” said the 5-star analyst. “From a more structural perspective, we expect INTC to highlight continued sequential revenue growth, improved profitability, and solid progress on key transformation metrics (manufacturing nodes, product roadmap, 18A foundry customer announced? etc.).”
Numbers-wise, Seymore sees revenue reaching $13.6 billion, amounting to a 5% sequential increase. This is a touch above the midpoint of the guide ($12.9-13.9 billion) and the Street’s $13.5 billion forecast. Although following management’s “soft positive” pre-announcement made at Deutsche Bank’s August tech conference, Seymore “would not be surprised if 3Q revenues came in even closer” to the high end of Intel’s guide.
As for the Q4 outlook, due to expecting a “cyclical recovery being moderated by typical seasonality,” Seymore has a “slightly more conservative approach to his forecast.” The analyst anticipates revenues of $14.4 billion, reflecting a 6% quarter-over-quarter increase, which aligns with the Street’s expectations. Seymore’s PF EPS forecast of $0.39 is lower than his previous estimate of $0.45, but it is based on the anticipation of higher gross margins and is “well above” the Street’s estimate of $0.31.
While Seymore’s figures often lean more bullish than the consensus, his take is not overwhelmingly positive.
“Overall,” Seymore summed up, “there are clearly many moving pieces with respect to INTC’s fundamental outlook both cyclically and structurally but we believe the sheer number of them is indicative of the great effort management is undertaking to right the ship. While we believe each of these actions is important to the long-term success of INTC, the timing and magnitude of the financial benefits from these actions remains uncertain to us.”
As such, Seymore maintained a Hold (i.e., Neutral) rating on Intel shares, backed by a $38 price target, suggesting upside of 6.5% from current levels. (To watch Seymore’s track record, click here)
Most agree with that thesis. Based on a mix of 20 Holds, 6 Buys and 5 Sells, the stock claims a Hold consensus rating. At $36.67, the average target implies a modest 3% upside from current levels. (See Intel stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
