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'Intel Is A Survivor'; Nomura Upgrades To Buy

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  • Shares of Intel Corporation (NASDAQ: INTC) have been volatile in 2015 and are down 4 percent year-to-date.
  • Nomura’s Romit Shah upgraded the rating on the company from Neutral to Buy, while raising the price target from $33 to $42.
  • Intel is a survivor and poised to benefit from increased data center spending and the strength of cloud, Shah noted.

Analyst Romit Shah pointed out that Intel’s shares had declined less than 10 percent year-to-date despite the company significantly missing 3Q revenues, pushing out 10 million in 2Q and reducing DCG guidance in 4Q. He added that this indicates that Intel is a survivor.

Shah expects Intel’s Data Center Group [DCG] to deliver a strong performance in 2016, driven by a significant improvement in data center spending and continued strength in the cloud.

Players like Microsoft Corporation (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOGL) and Apple Inc. (NASDAQ: AAPL) had announced plans to increase investment in data centers. The Nomura report added that the industry-wide internet capex is expected to increase from 6 percent in 2015 to 18 percent in 2016.

The contribution of the cloud segment to Intel’s data center business has increased from 20 percent in 2013 to 33 percent in 2015. Increased revenues from data center are expected to boost the company’s margins, Shah stated.

The CY16 EPS estimate has been raised from $2.30 to $2.51, reflecting robust revenue growth in DCG, benefits derived from the acquisition of Altera Corporation (NASDAQ: ALTR) and an extra week of revenues.

Latest Ratings for INTC

DateFirmActionFromTo
Apr 2018BarclaysMaintainsOverweightOverweight
Apr 2018Bank of AmericaMaintainsBuyBuy
Apr 2018Tigress FinancialUpgradesNeutralBuy

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