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Intel just published a great quarter, but can the momentum last?



Intel Corp. reported a quarterly burst of March led by strong growth in its data-centric business, but doubts remain regarding the sustainability of the company's results as well as problems with chip production. of 10 nanometers.

"We think the consensus expected good results, but these were really impressive," wrote SunTrust analyst Robinson Humphrey, William Stein. Intel beat earnings and revenue expectations by a wide margin on Thursday afternoon and reported a 25% growth for its data-centric businesses, excluding McAfee. Revenue related to data accounted for almost half of Intel's revenue

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total sales for the quarter, a record of the company. Stocks rose 0.3% on Friday's operations after losing most of their previous gains.

Stein raised his target price to $ 57 from $ 50 after the results, but stayed on the sidelines. "The sustainability of force and valuation keep us in suspense," Stein wrote.

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Meanwhile, Thursday's results were enough to make Bernstein analyst Stacy Rasgon abandon his bearish stance about the actions of Intel. "The company's reversal in the spending perspective made the case a challenge," Rasgon wrote. "The recent and unexpected [data-center group] inflection has made it painful."

Rasgon had a somewhat more optimistic view of the future growth of the company. He considered Intel's forecast as a double-digit growth projection for the data center group during the second half of the year and a 15% to 20% growth for the entire year. "Since CFO Bob Swan does not like to take numbers he can not reach, we suspect that 2H visibility could be better than what they are allowing," he wrote. Rasgon improved market performance to below-performance market on Friday and raised its target price to $ 54 from $ 38.

Data-centric companies are perceived as crucial amid increased competition for companies inherited from Intel .

Another key area of ​​concern for investors remains the company's discussion of the challenges associated with the production ramp of its 10-nanometer chip, which is said to drive improvements in both performance and efficiency. "The rate of improvement is slower than we anticipated," Chief Executive Brian Krzanich said in the company's earnings call. Accordingly, Krzanich said that "volume production" will now take place in 2019 instead of the second half of 2018.

This announcement "clearly shows that the benefits of Moore's Law are increasingly difficult to achieve" said Stifel analyst Kevin Cassidy wrote on Friday. It qualifies the pending stock but raised its target price to $ 57 from $ 53.

Problems with the 10-nanometer production also pauses RBC Capital Markets analyst Amit Daryanani. "Taking into account recent results and execution, we are becoming more and more constructive in the stock," wrote Daryanani, who rates the stock in the sector's performance and increased its target to $ 58 from $ 54. , we are looking for more test points in terms of performance improvement of 10 nanometers and better visibility in [data-center group] in 2H: 18. "

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UBS analyst Timothy Arcuri, however, is not too worried: "Manufacturing problems in progress with 10 nanometers should definitely be solved, but this is an old narrative (the equipment companies have changes not seen in Intel's plan for many quarters) and Intel's move to 7 nanometers (once [extreme ultraviolet lithography]) is a big leap in the scale that will pay future dividends especially for computationally intensive artificial intelligence applications. " Arcuri has a buy rating of the shares and a goal of $ 70.

Wall Street sentiment towards Intel is quite positive. Of the 40 analysts surveyed by FactSet that cover the shares, 26 have purchase ratings, 12 have retention ratings, and two have sales ratings. Its average price target is $ 59.89, approximately 10% above current levels.

Intel shares have risen 43% in the last 12 months, while the S & P 500

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has gained 12% and the Dow Jones industrial average

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of which Intel is a component, has risen 16%.


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