Mixed Response from Analysts Following Intel's Investor Day
Analysts report mixed responses following Intel (NASDAQ: INTC) investor day on Thursday.
CEO Brian Krzanich said that he plans to expand the company's small contract manufacturing business and added that the company will go much broader in foundry business. Intel is expected to offer a new high-performance atom chip directly targeting the largest phone makers.
Despite positive expansion and innovation, CFO Stacy Smith commented that the company expects FY14 PC group sales to be down in the mid-single digits range and the net income from operations was flat year-over-year.
Raymond James analyst Hans Mosesmann had a positive outlook on Intel in his notes to clients. Mosesmann wrote, "Wow. It's very refreshing to see Intel make this move and could have important implications for the industry." Raymond James maintained its Underperform rating on Intel.
Mark Lipacis from Jefferies continued the optimistic momentum following analyst day. Lipacis commented that he left with an increased conviction in buy thesis due to the compelling message on stabilizing PCs and the growth in tablet chips. The analyst wrote, "Intel's message was compelling: its product line is geared to the new market reality, PCs are stabilizing, servers are growing, and it expects to grow its tablet MPU shipments by 4x to 40m units in 2014." Jefferies maintained their Buy rating and raised the price target from $30 to $32.
Piper Jaffray analyst Jagadish Iyer had a more weary take on Intel. He noted that Intel's 2014 capex forecast of approximately $11 billion versus the estimate $10.4 billion indicates that they will probably deploy more multiple patterning while EUV issues continue to get fixed. Iyer added that Intel's comments on EUV as not being cost effective for 10nm process is hurtful for ASML's EUV adoption.
Piper's Gus Richard reiterated that the 2014 forecast is conservative and "somewhat disappointing," missing Piper Jaffray's estimated single digit positive forecast for FY14 PC group sales. Richard noted that Intel's manufacturing lead over TSMC is expected to lead to tablet and smartphone gains.
Canaccord maintained its Hold rating and increased the price target from $20 to $22 today. Roth Capital raised the PT from $23 to $25 and kept its Neutral rating. Nomura maintained a Reduce rating and increased the price target from $18 to $20.
Intel shares fell 2.9 percent pre-market, after reporting guidance at analyst day of a flat 2014 year-over-year revenue and gross margin in the 55-65 percent range versus the estimated 60.3 percent.
Intel closed at $25.23 on Thursday and is currently trading down 4.72 percent.
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