Here’s what Wall Street is saying about Intel ahead of earnings

Intel (INTC) is scheduled to report results of its fiscal third quarter after the market close on October 23 with a conference call scheduled for 5:00 pm ET. What to watch for:

GUIDANCE: Along with its last report, Intel (INTC) guided for Q3 adjusted earnings per share of 0c on revenue of $12.6B-$13.6B. At the time, analysts were expecting the company to report Q3 EPS of 4c on revenue of $12.62B, but those figures have since changed to 1c and $13.14B, respectively.

INVESTMENTS: Intel has received many major investments since it last reported quarterly earnings, starting with SoftBank (SFTBY) in mid-August announcing the purchase of $2B of Intel stock. A week later, Intel announced an investment agreement with the U.S. government, under which the U.S. would make an $8.9B investment in Intel common stock, “reflecting the confidence the Administration has in Intel to advance key national priorities and the critically important role the company plays in expanding the domestic semiconductor industry.” The announcement came several weeks after President Donald Trump accused CEO Lip-Bu Tan being “conflicted” due to his connection to China and said he “must resign, immediately.”

Meanwhile, in mid-September, Nvidia (NVDA) said it will invest $5B in the chipmaker as part of a deal to co-develop multiple generations of custom data center and PC products that “accelerate applications and workloads across hyperscale, enterprise and consumer markets.” Additionally, Bloomberg (AAPL) about an investment in the troubled chipmaker. At the time, Bloomberg note the talks were in early-stages and may not result in a deal.

PRICE TARGET CHANGES: Earlier this week, Morgan Stanley raised the firm’s price target on Intel to $36 from $23 and kept an Equal Weight rating on the shares. The firm raised its price target to reflect foundry optimism and raised its revenue and non-gaap EPS estimates for the September quarter “slightly.” With the stock up 100% since August 1 on a slew of headlines inspiring new levels of optimism around foundry, the firm says it is “skeptical on the reasons the stock has rerated,” but it sees numbers coming in above a low consensus bar when Intel reports after the market close on Thursday, October 23, the analyst tells investors in a preview.

Additionally, Wedbush analyst Matt Bryson increased the firm’s price target on Intel to $20 from $19 and reiterated a Neutral rating on the shares ahead of quarterly results. While the firm struggles to justify the company’s recent surge in valuation, it also is reluctant to shift its opinion on the stock into an earnings period where Intel’s results/outlook should show improvement.

DOWNGRADES: Multiple firms downgraded Intel in the weeks and months leading up to the Q3 print. Earlier this month, BofA downgraded Intel to Underperform from Neutral with an unchanged price target of $34. The recent $80B jump in Intel’s market cap more than reflects its improved balance sheet and external foundry potential, while the competitive outlook remains challenged with “no discernible AI portfolio/strategy,” uncompetitive server CPU, and less flexibility now than before in divesting loss-making manufacturing, argues the analyst, who says the stock has come “too far, too fast” when considering the company’s still-challenged fundamentals.

Meanwhile, HSBC analyst Frank Lee downgraded Intel to Reduce from Hold with a price target of $24, up from $21.25. While the company’s the deals with SoftBank, U.S. government and Nvidia were at a discount to the market price, the stock is up 55% since the first deal announcement in August, the analyst tells investors in a research note. HSBC believes further deal announcements could drive the stock higher in the short term, but says Intel’s own fab execution remains key to any sustainable turnaround. As such, it believes the re-rating of Intel shares is overdone. A technology deal with TSMC (TSM) “is the only one that matters” and is unlikely despite potential for future investments, contends HSBC.