Shares of PC makers, Intel (NASDAQ: INTC) and HP (HPQ) have not fared well in the past year and have dropped by more than 30% and 7%, respectively. Let us take a look at these two stocks in more detail.
The drawdown in Intel stock has been as the chip manufacturer has been under tremendous pressure due to intense competition and its future expansion prospects remain uncertain.
This was evident in Intel’s Q3 results as revenues declined 20% year-over-year to $15.3 billion, reflecting lower revenue from the Client Computing and Datacenter and AI business segments. The lower revenues have compressed margins and suppressed profits for the chip giant.
The weak Q3 results and the spin-off of INTC’s autonomous driving business, Mobileye (MBLY) prompted Mizuho Securities’ top-rated analyst Vijay Rakesh to initiate a Hold on INTC stock with a price target of $32.
As the above graphic shows, besides Rakesh, other analysts are also sidelined about the stock with a consensus Hold rating based on three Buys, 19 Holds, and eight Sells.
According to the analyst, INTC is experiencing “increased challenges in both the server and PC markets.” The analyst elaborated further, “While Intel is regaining some share in PCs, in the key high-margin server [and] data center segment, it continues to see market-share loss heading into the first half of 2023.”
HP Not Faring Any Better
Shares of HPQ were up in pre-market trading on Wednesday as analysts pointed a silver lining to the company’s disappointing guidance. The PC maker had announced that it planned to reduce its workforce by 4,000 to 6,000 people over the next three years resulting in cost savings of $1.4 billion.
Citi top-rated analyst Jim Suva viewed the restructuring positively. The analyst has a Hold rating on HPQ stock and a price target of $31.
Suva elaborated further, “To put this in context, that is $0.50 of EPS help in [fiscal 2023] and over $1 of EPS exiting [fiscal 2025] and we believe is a big positive that investors did not expect.”
However, other Wall Street analysts do not share Suva’s optimism and are cautiously bearish about the stock with a consensus Moderate Sell rating based on eight Holds and four Sells, as indicated by the above graphic.
Conclusion
It is evident that both INTC and HPQ are struggling right now as a result of intense competition and macroeconomic headwinds. It remains to be seen how both of these companies navigate these choppy waters.
