2023 represented a revival year for Intel (NASDAQ:INTC). This was evident both in terms of share price (up by 94%) and real-world performance. The company’s recent quarterly results serve as a testament to the ongoing recovery in the PC market, while it appears to be on track to meet the targets outlined in its roadmap.
So, is another strong display in the offing when the chip giant reports 4Q23 earnings on Thursday (January 25) once the market closes?
Maybe not, appears to be the answer provided by Susquehanna’s Christopher Rolland, a stock expert ranked in 6th spot amongst the thousands of Wall Street analysts.
“We expect results to be generally in-line but lighter on guidance as: 1) MBLY has already confessed; 2) Client weaker on choppy PC data; 3) slight Server inventory overhang/GPU crowd-out; and 4) PSG/NEX inventory correction,” the 5-star analyst opined.
Although the PC segment seems to have bounced back after the inventory depletion in the third quarter, data on original design manufacturer (ODM) builds showed a decline towards the end of the year. Rolland attributes the drop to a “slower ramp” for Meteor Lake, Intel’s first generation of Core Ultra mobile processors, which was announced in December. This could potentially create a headwind for the first quarter and the first half of Q2.
While Rolland anticipates improved alignment between sell-in and sell-through in 2024, he remains cautious about end demand in the first half of the year, suggesting that AI PCs “may not be a growth story until further out.”
Additionally, Susquehanna’s 4Q PC-SIGnals data indicates that Intel may be gaining desktop market share thanks to the Raptor Lake processor’s refresh. However, this growth might be short-lived, as the launch of AMD’s Zen 5 processors, potentially in the summer, could pose a competitive challenge.
As for the outlook for the year, while it remains to be seen whether Intel provides a full-year guide, Rolland is calling for revenue of ~$60 million (a low double digits year-over-year increase) and gross margins between 46-48%.
All told, Rolland maintained a Neutral rating on Intel stock, yet bumped the price target up from $38 to $42. Nevertheless, that figure still remains 13% below the current share price. (To watch Rolland’s track record, click here)
Most of Rolland’s colleagues also prefer sitting this one out. 18 other analysts join him on the sidelines and with an additional 8 Buys and 3 Sells, INTC stock receives a Hold consensus rating. The average target stands at $46.09, suggesting the shares are overvalued by ~5%. (See Intel stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
