A Review Of Intel's Q4 Results: Await Further Color At The Analyst Day

Intel Corporation INTC reported overall strong results for Q4, with upside being driven by the client and memory segments, although datacenter was weaker.

Bernstein’s Stacy A. Rasgon maintains a Market-Perform rating on the company, while raising the price target from $33 to $36.

Disappointing Guidance

The analyst mentioned that the revenue and gross margin guidance for Q1 was also above the consensus expectations, although the opex guidance was also higher than expected.

For 2017, the revenue guidance was roughly in line with the consensus forecast, after adjusting for McAfee. However, the opex guidance was again well ahead of consensus, with capex at a record $12 billion, “as Intel builds out for their memory ramp and 10nm.”

“While 2017 guidance incorporates some caution on PCs and (for the first time) a cut to datacenter to start out the year, some investors are likely to approve of a revenue outlook that could be somewhat conservative,” Rasgon stated.

FCF Declining

The analyst noted, however, that both Intel's margins and datacenter results were disappointing, with opex control appearing to slip. The EPS guidance was also of “somewhat” low quality, while free cash flow has been declining due to record capex.

“Additionally, it seems memory is no longer just a memory for Intel. Indeed, while we do believe revenues for the year could come in higher than guidance, memory is likely to be the major swing factor,” Rasgon went on to say.

At last check, shares of Intel were up 1.78 percent at $38.23.