BMO On Intel's Q3:'We Still Aren't Fans Of The Stock'
Intel Corporation (NASDAQ: INTC) has once again lowered the 2016 outlook for its DCG business. While expressing concern regarding the company’s ability to hit the DCG target, BMO Capital Markets’ Ambrish Srivastava said in a report that ASPs in DCG had continued to deteriorate, “missing what we thought was Intel’s expectation for a reversal in 3Q.”
Analyst Srivastava maintained a Market Perform rating on the company, with a price target of $34.
DCG Outlook Lowered
Intel now expects the DCG segment to generate high-singly-digit growth versus its prior projection of low-double-digit growth, which had already been lowered once. For the past four quarters, ASPs have been in the negative territory and recorded a 3 percent y/y decline in the latest quarter, versus a 1 percent decline in the prior quarter, Srivastava pointed out.
The EPS estimates for 2016 and 2017 have been reduced from $2.08 to $2.02 and from $2.86 to $2.66, respectively. The reduction in estimates reflects lower revenues and dilution from the pending Intel Security Group transaction, the analyst noted.
Intel reported its Q3 results ahead of expectations, with revenue of $15.8 billion, versus consensus expectation of $15.6 billion. EPS came in at $0.69, beating the consensus expectation of $0.67.
The company projected sequentially flat revenue, versus consensus expectation of 2 percent growth. Despite beating GM expectations in Q3, Intel guided to GM of 61 percent for Q4, versus the BMO estimate of 62 percent.
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|Feb 2017||Canaccord Genuity||Downgrades||Buy||Hold|
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