FBR Capital Maintains Market Perform on Intel After 4Q Guidance Cut

FBR Capital Markets has published a research report on Intel Corporation INTC after the company cut its 4Q guidance this morning. In the report, FBR Capital Markets writes, "The firm previously expected 4Q11 revenues of $14.7B +/- $500M (+0%-7% QOQ), though now expects revenues of $13.7B +/- $300M (-2% to -6% QOQ). The firm also reduced gross margin guidance by 50 bps versus previous guidance to 65.5% (non-GAAP). While we do think HDD shortages are impacting the PC supply chain in 4Q, we also think Intel's revenue performance has been disconnected from the rest of the PC supply chain for at least a couple quarters, with this "mean reversion" correction that not surprising given these dynamics. Indeed we had previously questioned the magnitude of Intel's unit strength relative to (a) market research about the PC market, (b) Dell and HP revenue growth performance, and (c) ODM build data, with Intel clearly outperforming all of these buckets. Given this mean correction, we think Intel is now more closely aligned with end market dynamics, with HDD supply recovery likely to allow revenue growth again in 2Q12." FBR Capital Markets maintains its Market Perform rating and $27.50 price target on Intel, which is currently trading down $1.18 from Friday's $25.01 closing price.