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Why This Analyst Thinks Intel And Texas Instruments Will Beat Q2 Expectations

July 15, 2021 2:17 pm
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Why This Analyst Thinks Intel And Texas Instruments Will Beat Q2 Expectations

Early tech reports include Intel Corporation (NASDAQ:INTC) and Texas Instruments Incorporated (NASDAQ:TXN), which will be out with their quarterly earnings scorecard next week. An analyst at Rosenblatt Securities is bracing for outperformance relative to expectations.

The Semiconductor Analyst: Hans Mosesmann reiterated a Sell rating on Intel shares and a $40 price target.

The analyst maintained a Buy rating and a $220 price target for Texas Instruments.

Intel's Q2 to Get a Lift From Low-end Chromebook Sales: Intel will likely report second-quarter sales and non-GAAP earnings per share slightly above the consensus estimates of $17.8 billion-$17.9 billion and $1.05-$1.07, respectively, analyst Mosesmann said.

The anticipated outperformance, according to the analyst, will come from low-end Chromebooks and recovery of the Data Center group business from the bottom seen in the first quarter.

On the earnings call, the analyst expects CEO Pat Gelsinger to address a few topics, including the infrastructure processing unit, the delay of Sapphire Rapids, and an update on industry-wide supply constraints.

Intel is likely to guide the September quarter below the consensus estimates that call for EPS of $1.08 and revenue of $18.2 billion, Mosesmann said.

"We continue to believe Intel will see weak data center revenue in 2H21, as well as share loss in the CPU market to rival AMD," the analyst wrote in the note.

The stock remains rangebound due to investor hopes that Gelsinger will turn things around in short order, the analyst said. This, according to the analyst, is less likely, given the continued delays and organizational upheaval.

Intel is scheduled to release its earnings Thursday, July 22, after the market close.

Related Link: Intel Vs. Advanced Micro Devices: A Technical Analysis

Texas Instruments Nicely Set Up: Texas Instruments remains poised to report above-consensus sales, Mosesmann said. The June quarter performance will be driven by a flat-to-low single-digit sequential increase in the analog segment and a low single-digit increase in the embedded processing segment, he added.

On the end-markets, the analyst said he expects continued strong momentum in industrial and automotive, as these end markets continue to see growing chip content per application.

Texas Instruments' preemptive move last year to build inventory that might help to tide over supply constraints, which is expected to remain for much of 2021 and 2022, he added.

"We see the continued emphasis on Industrial & Automotive, more balanced analog/embedded growth vectors, and strong excess cash return setting up TI nicely as 2021 commences," the analyst said.

Texas Instruments is due to report Wednesday, July 21, after the market close.

The Semiconductor Stock Price Action: At last check, Intel shares were down 1.36% at $55.65 and Texas Instruments shares were slipping 1.51% to $188.39.

Related Link: Apple Could Take 50% Bite Out Of Intel's Business In 2021: Report

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