Deutsche Bank Warns Intel's Quarter 'May Be A Bit Softer Than Consensus'

In a report published Monday, Deutsch Bank analyst Ross Seymore maintained a Buy rating and price target of $37 on

, while lowering estimates following the softness in the PC segment and delayed seasonality. Although the company's 2Q performance seems to be on track to meet the guidance range, the analyst believes that the results for the quarter could be slightly below the consensus, with the timing of the launch of Win10 and Skylake, the next generation processor, pushing seasonality benefits to a large extent into 4Q, rather than 3Q. However, the Deutsche Bank report also asserted, "[W]e continue to believe INTC offers a favorable risk/reward at its current discount valuation and expect shares to appreciate as PC headwinds lessen (2H15/2016)." Both the softer than anticipated PC demand and timing of the product launches pushing seasonality further in 2H are likely to lead to channel inventory burn. Due to this, the gross margin estimates for 2015 and 2016 have been lowered by 50bps. However, lower opex is expected to offset this decline to some expect, as the company "adjusts costs to reflect the lower revenue." In addition, the analyst now expect a decrease in share buybacks in 2015, while Intel builds its domestic cash balance prior to the close of its acquisition of

. The 2Q revenue and EPS estimates have also been lowered, along with the 2015 and 2016 revenue and EPS estimates.