Mobility May See 'Light Of Day' And Intel Could Win, Predicts Sterne Agee CRT

• Intel Corporation INTC shares have been volatile in 2015, and are down 8 percent year-to-date.
• Sterne Agee CRT’s Douglas Freedman maintained a Buy rating on the company, with a price target of $38.
• Backed by a modem design win, Mobility losses could decline significantly in 2016, Freedman said.

Conversations with supply chain partners suggest that Intel may be preparing to ramp material production of its 7360 modem chipset in mid-2016 to 10M-30M units per month, analyst Douglas Freedman mentioned. He added that the company’s performance may be boosted by $850M worth of incremental modem sales and a $500M extra 1-week benefit in 2016.

Freedman believes that a high-volume mobile design win at either Apple Inc. AAPL [Rated: Buy] or Samsung [Rated: Buy] would be needed to ship the projected volumes.

The increased modem sales could reduce Mobility losses by an additional ~400M in 2016, “adding to the impact from improved cost structure of tablet product,” the analyst said, while adding that Mobility was “finally seeing the light of day.”

The revenue and EPS estimates for 2016 have been raised from $59.6 billion to $61.1 billion and from $2.47 to $2.58, respectively.

“We also view INTC's new $3.5B memory investment as a potential source for incremental revenues in 2017, and not material enough to cause oversupply in the NAND market,” Freedman added.