Citi Continues To Expect A Beat And Raise Q2 From Intel

Citi’s Christopher Danely expects Intel Corporation INTC to report another beat and raise for the June quarter next week, which would drive the stock to trade higher.

Danely reiterated a Neutral rating on the company, with a price target of $35.

Beat And Raise Expectations

The analyst mentioned that June notebook shipments were better than expected, with positive data points from the PC supply chain. This was expected to be another positive for Intel.

June notebook ODM shipment rose 18 percent month-on-month, above normal seasonality of an increase of 16 percent month-on-month.

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In addition, 2Q16 notebook units rose 10 percent quarter-on-quarter, above the estimate of 7 percent quarter-on-quarter growth and normal seasonality of 6 percent quarter-on-quarter growth.

Notebook units are estimated to rise 5–8 percent quarter-on-quarter in 3Q16, mostly in line with normal seasonality of growth of 6 percent quarter-on-quarter.

Concerns

“While this is the second consecutive month of positive notebook shipments, we worry Intel’s data center business could miss 2016 revenue guidance of up mid-teens YoY,” Danely stated.

The analyst also expressed concern about the company’s 94 day inventory, since each time that Intel’s inventory has risen above 90 days, gross margins have fallen at least 3 percent.

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