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Intel (NASDAQ: INTC) will report fourth quarter 2013 results on Thursday, January 16 after market close.

Deutsche Bank Markets Research analyst Ross Seymore commented that the valuation of Intel over the past two years was pressured by declines in the PC market.

Seymore reported, "With signs of PC stabilization and growth in new product categories (2 in 1s, tablets, phablets, etc) we believe the company is in a position to modestly grow earnings in 2014. Perhaps more significant we believe a stable PCG will remove a key terminal value debate around the company and move the discussion to segments (DCG, NAND Solutions Group, SSG, and Intelligent Systems Group.) where Intel is executing very well and taking share from the competition."

Seymore modeled fourth quarter revenue of $13.75 billion and EPS of $0.53, both above the Street's estimates of $13.7 billion and $0.52, respectively. Deutsche Bank estimates first quarter 2014 revenue of $12.8 billion and EPS of $0.42. Guidance is largely in-line with the Street.

Deutsche Bank reiterated a Buy rating and $28.00 price target.

J.P. Morgan raised its rating from Neutral to Overweight and raised the price target from $20.00 to $29.00 on Tuesday. Analyst Christopher Danely made this "leap of faith" based on stabilization in the PC market in 2014 and confidence in Intel's new CEO. Danely emphasized that the company holds a realistic outlook for the first time in years with flat 3Q13 revenue guidance and 2014 revenue growth. With appropriate guidance and Intel's announcement for the opening of their foundry business, J.P. Morgan expects and improvement in margins, returns, and revenue.

The analyst estimates that the foundry segment could contribute 10 percent of incremental revenue, or $6.3 billion.

On Sunday, Citi Research analyst Glen Yeung noted that the likely potential new foundry customer Marvell Technology Group (NASDAQ: MRVL) could help validate Intel's strategy.

Yeung commented, "We believe Marvell is a potential good fit for Intel in integrated baseband/application processors. Our sense is that performance gains using Intel's 22nm FinFet process would be substantial for Marvell, providing the catalyst for this relationship. While volumes are likely to be low at the outset (no changes to estimates at this time), we suspect investors will greet any such deal favorably, as it helps to validate Intel's foray into the foundry domain."

Mizuho Securities analyst Ruben Roy reported that continued PC improvement should benefit Intel and Marvell, and expects an in-line to slightly better report for the fourth quarter. Mizuho estimates that results will be slightly higher than management's forecasted range ($13.7 billion, or up 2% Q/Q).

Roy commented, "We believe that the stabilization and gradual improvement of PC demand that began to emerge in 3Q continued into 4Q. Recent month of December unit shipment reports from the major Taiwanese notebook ODMs appear to have been modestly better than expected. As well, enterprise demand continues to improve ahead of the expiration of Microsoft XP support. In addition to PC trends, near-term focus will likely remain on INTC's Data Center business which increased less than expected in 3Q."

Roy remains positive on Intel for 2014. Mizuho noted that the seven percent Q/Q consensus estimate of revenue decline is "appropriately conservative."

Intel's earnings-per-share forecast is up more than seven percent for the quarter, but down almost 11 percent for the full year. Quarterly revenue is expected to have risen marginally and slipped for the full year.

Intel will hold a conference call on January 16 at 2:00 PM PDT. Investors and the general public can access the call at 1-877-303-7005, PC: 59585116.

Posted-In: Citi Research Deutsche Bank Markets Research Glen Yeung J.P. Morgan Christopher DanelyAnalyst Color Earnings News Analyst Ratings

 

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