Analysts Maintain Intel's Rating Unmoved Amid Programmable Solutions Group Spinoff

Rosenblatt analyst Hans Mosesmann reiterated Intel Corp INTC with a Sell and a $17 price target.

Intel shared plans to spin off its Programmable Solutions Group business as a standalone business, giving it flexibility for accelerated growth and helping it to compete more effectively. The move is more tactical than strategic, as Intel is cash-starved, the analyst writes.

Intel mismanaged Altera early on and has only recently begun a reinvestment and focus initiative likely related to the spinoff angle.

The 2-3 year timeline suggests Altera is not strong enough today to be standalone. Otherwise, they would have sold the unit. 

The analyst wonders if Altera will shift foundry services back to TSMC. Altera made that ill-fated shift from Taiwan Semiconductor Manufacturing Company Ltd TSM to Intel 14nm before the Intel acquisition.

The Altera leadership within Intel is non-Altera (Intel), which is not a knock but an angle that does not inspire.

Intel has a tough road ahead. The Street may applaud the IPO spiel, but the fundamentals do not change.

Mizuho analyst Vijay Rakesh maintained a Neutral rating with a price target of $36.

In the near term, Rakesh will see AI spending as a headwind to DC Compute spend. 

But he believes INTC Sapphire Rapids and Emerald Rapids are on track. The re-rating reflects the company being fairly valued, with continued headwinds in DC from inventory digestion and a customer shift to AI spending over traditional servers. 

Rakesh projects Q3 revenue of $13.4 billion vs. consensus $13.5 billion and EPS of $0.20 vs. consensus $0.21.

Truist analyst William Stein reiterated a Hold rating with a price target of $37.

Investors understand that INTC has lost its leadership positions in semiconductor manufacturing process technology (to TSMC) and CPU performance (to Advanced Micro Devices, Inc AMD). 

While the company has established a clear objective to regain process and product leadership over the next few years by delivering five new process nodes in four years and developing a leading foundry business, its competitive position, margins, and cash flows have diminished. 

Stein sees a constructive view on INTC as an explicit opinion that INTC will re-establish process leadership vs. TSMC and product leadership vs. AMD and that x86 market share will hold up versus new CPU solutions. 

KeyBanc analyst John Vinh maintained a Sector Weight rating with a price target of $35.

Vinh thinks this makes much sense and is consistent with the spinoff of prior non-core assets such as Mobileye. 

While the past acquisition of Altera (PSG) initially focused on defending the company's position in the data center and expanding into accelerators, the adoption of FPGAs beyond MSFT has been minimal, with most other CSPs concentrating on the use of GPUs or ASICs. 

Vinh sees minimal competitive implications as PSG's architecture was never optimized for low-end FPGAs. Over time, this potentially creates increased competition for LSCC as it seeks to expand into mid-range FPGAs with Avant.

Oppenheimer analyst Rick Schafer had a Perform rating and remained sidelined as INTC's turnaround efforts proved out.

Roth MKM analyst Suji Desilva reiterated a Neutral and a $35 price target.

Desilva projects Q3 revenue of $13.4 billion and EPS of $0.20.

Price Action: INTC shares closed higher by 0.67% at $35.93 on Wednesday.