Intel Delivers A Better Q3 But Guides For A Soft Q4

Intel Corporation INTC guided for a soft fourth quarter, despite reporting better-than-expected third-quarter numbers.

However, Barclays reiterated its Overweight rating with a price target of $45.

Intel reported non-GAAP EPS of $0.80, higher than consensus’ $0.73 and generated revenue of $15.8 billion, also topping Street view of $15.58 billion.

However, the company guided fourth-quarter revenue of $15.7 billion + / - $500 million versus consensus of $15.86 billion as the company cut its Enterprise server outlook and added some caution for PCs into year-end. Intel now sees Enterprise down versus flat and expects lower PC demand.

“The server miss will likely disappoint but PC declines are slowing and even at the lower rate server are still up double digits in the 2H, which should continue in 2017,” analyst Blayne Curtis wrote in a note.

Related Link: Goldman Sachs Concerned About Intel's Lack Of Growht, PC Business

In addition, Intel expects a decline in non-GAAP gross margin to 63 percent and operating costs is expected slightly higher Q/Q ($5.2 billion). This implies proforma EPS of $0.73 slightly below consensus $0.77.

“A disappointment given our recent upgrade, but the thesis is unchanged as we still see this as an improving growth story as PCs become the minority of revenue and servers still grow even with a down Enterprise market,” Curtis continued.

To reflect weak fourth-quarter guide, Curtis trimmed expectations for CY16 revenue/EPS to $58.73 billion/$2.66 (prior $59.14 billion/$2.65), and CY17 moves to $61.86 billion/$2.83 (prior $62.36 billion/$2.93).

Shares of Intel closed Tuesday’s trading at $37.75. In the pre-market hours Wednesday, the stock fell 4.85 percent to $35.92.

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