FBR Capital Markets Reiterates Market Perform Rating, $23 PT on Intel Corporation

In a report published Friday, FBR Capital Markets reiterated its Market Perform rating and $23.00 price target on Intel Corporation (NASDAQ: INTC).

FBR Capital Markets noted, “For 2013, Intel guided revenues to grow low single digits, which requires better-than-seasonal PC client growth in 2H13 at a time when smartphone and tablet cannibalization impacts remain meaningful. Further, Intel spooked investors by guiding capital expenditures to a somewhat massive $13 billion, which includes $2 billion of spending for its first 450 nm (18-inch) development facility. Investors worry about stagnant or shrinking unit shipments while Intel simultaneously ramps capacity spending meaningfully. We further note that Intel's capital expenditures of $11 billion in 2012 and $13 billion in 2013 are well above current depreciation run-rates closer to $7 billion, and with a $4 billion increase in annual depreciation driving 800 bps of gross margin compression...spooky thoughts indeed if PC unit growth fails to materialize. Stepping back, sales of tablets and smartphones are tempering growth in Intel's core business. INTC's nearly 4% dividend yield seems attractive, but investors are fighting the PC cannibalization tide here, with no relief in sight likely anytime soon.”

Intel Corporation closed on Thursday at $22.68.

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