What Does Wall Street Have To Say About Intel's Earnings Report?

Intel Corporation INTC's earnings beat on Thursday was compelling enough to send the stock higher by more than 1 percent on Friday. But what are Wall Street analysts saying about the stock that is still lower by more than 2 percent since the start of 2017?

UBS: Data Center Improving, PC Still A Concern

UBS's Stephen Chin maintains a Buy rating on Intel's stock with a price target lowered from $41 to $40 (see his track record here).

Intel's data center showed signs of improvement in the quarter, most notably a sales acceleration to 11 percent year over year, Chin noted. The cloud customer sub-segment also grew 36 percent and the data center's segment as a whole benefited from a 300 basis point improvement in gross margins from the prior quarter to 38 percent.

Intel continues to guide its full-year data center growth to a high-single-digit rate, which suggests some level of normalization in growth later on this year.

On the other hand, management said that its PC channel inventories are at healthy levels but this "requires vigilant monitoring" as the bottom half of the year progresses, the analyst added.

Finally, the analyst's $40 price target is based on a new 13x multiple (down from a prior 14x) on his 2018 EPS estimate of $3.10 (was $2.93). A revised multiple is justified given expectations for sales growth in the data center to normalize to a high-single-digit rate along with continued uncertainties in the PC end market.

BMO: Not Inspired

BMO Capital Markets' Ambrish Srivastava maintains a Market Perform rating on Intel's stock with an unchanged $34 price target (see his track record here).

Intel's earnings report did not leave the analyst "particularly impressed," even though it did consist of a beat and raise, the analyst explained. The beat came from PC business, which along with contributions from MobileEye, is also factored into the raised guidance.

Meanwhile, pro forma gross margins are still "largely flat" despite the company reporting an increase in revenues. And yet again the data center's performance was slightly lower than expected.

While the analyst certainly isn't "inspired" by the results, he may be "intrigued."

"We say we may be intrigued because we have not recommended the shares for over two years now and we have seen capitulation from the long-term bulls on the Street, Srivastava wrote.

Loop Capital: Impressive Report

Loop Capital Markets' Betsy Van Hees maintains a Buy rating on Intel's stock with a price target raised from $43 to $45.

Intel once again raised its full-year guidance, which is impressive as it comes at a time when the PC industry is still in decline, Van Hees stated. Meanwhile, Intel's client computing group saw a 3-percent quarter-over-quarter revenue increase and the entire data center saw a 3-percent revenue growth. While the bears will argue this 3-percent growth isn't enough to be viewed positively it nevertheless represents a "considerable positive showing the strength of INTC's product portfolio."

Finally, Intel's strong report should signal to investors that the company is not just a PC company and its ongoing transformation will result in sustainable earnings and revenue growth moving forward.

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