Market Overview

JMP Securities: All Intel Managed To Do Was Exceed Reduced Expectations


Intel Corporation (NASDAQ: INTC) surprised the Street on Wednesday by reporting better-than-expected second quarter numbers. However, Alex Gauna, JMP Securities analyst, isn't too impressed. Gauna was on CNBC to explain why.

Investors Shouldn't Be Running Towards This Stock

"I think coming into this call most of the Street was expecting a miss, certainly JMP Securities was," Gauna said. "So this is a bit of a relief bounce here, but what we're pointing out is that all Intel managed to do was exceed reduced expectations."

"This is still a story where revenue is declining, inventories climbed on the quarter, the company brought down full year expectations. Gross margins are contracting and that's not the kind of the environment where we think investors should be running towards this stock."

Fundamental Change In Landscape

Gauna was asked what will make him change his stance on the company from negative to positive. He replied, "We'd have to see a fundamental change in the landscape. What's happening right now in the background is that Intel is ceding market share to ARM-based computing alternatives. Really doesn't have a strategy that's working in mobile. It appears to have abandoned its foundry activity. Now buying its largest foundry company rather than forging ahead with a foundry strategy. So, we need to see some changes there."

"And the other thing that we'd like to see -- we'd rather see CAPEX going up rather than down. It really tells us that Intel has some concerns itself about its own intermediate-term outlook. That's also why we think they made such a desperate bid, overpriced bid for Altera," Gauna concluded.

Latest Ratings for INTC

Feb 2019Deutsche BankMaintainsBuyBuy
Feb 2019Morgan StanleyUpgradesEqual-WeightOverweight
Jan 2019SusquehannaDowngradesPositiveNeutral

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Posted-In: Alex Gauna CNBC JMP SecuritiesAnalyst Color Analyst Ratings Media


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