Intel stock 2021 Intel is 39;very ambitious39; but now comes the hard part
Intel stock Intel stock comes part but now is Intel 'very the ambitious' hard
Wed, 24 Mar 2021 10:00:00 -0700
's new chief executive is feeling ambitious, and now analysts are wondering whether the company can follow through on its big plans
Intel Corp.’s new chief executive is feeling ambitious, and now analysts are wondering whether the company can follow through on its big plans.
Chief Executive Pat Gelsinger recently took over the top job at Intel INTC, -1.48% following a period of setbacks for the chip giant, and he addressed investors Tuesday to lay out what one analyst described as a “very ambitious plan” for its future strategy.
His comments indicated that Intel intends to remain an integrated device manufacturer (IDM) while also doing some outsourcing and launching a new foundry services business.
“It’s all about execution here,” wrote Cowen & Co.
analyst Matthew Ramsay.
“Given missteps and delays over the last seven years this is a 100% a show-me story.
Hopefully the massive outsourcing conversations cease, but Intel still needs to prove a path back to competitiveness with TSMC TSM, -4.20%. ”
Ramsay raised his price target on Intel’s stock to $81 from $80 while reiterating an outperform rating on the stock.
Opinion: Intel’s new CEO makes bold moves in manufacturing
Intel shares rose 0.1% in Wednesday morning trading, though they were up as much as 6.2% earlier in the session.
Bernstein analyst Stacy Rasgon commented that “one can’t fault new CEO Pat Gelsinger for a lack of vision” and described Gelsinger’s approach as an “all of the above” strategy, though he still has a bearish view on the stock.
“The bull case here remains ‘cheap hope’ and we suppose investors can still have some reason to hope, at least for now; at a minimum Pat exudes an enthusiasm and confidence that has been sorely lacking at Intel for some time,” Rasgon wrote.
“At the same time however, executing on this plan is going to be very challenging, and we suspect the economics during the transition are going to get uglier; we will see how well appetite holds up as the truer picture emerges.”
He rates Intel’s stock at underperform with a $43 target price.
Evercore ISI analyst C.J.
Muse wrote that “it’s hard not to see shares continuing to grind higher” given that “the burden of proof around Intel negativity appears to have shifted to the bear camp” and Intel is expected to benefit from government assistance.
The “clear winners” from Intel’s news, however, are the chip-equipment companies, in Muse’s view, since these will benefit from Intel’s plans to boost its spending.
“While the transformation at Intel will take many years to fully unfold, what is crystal clear to us is that the uplift in spending by Intel along with capex discussions elsewhere from leading foundry players suggest some upside to CY21 WFE [wafer-fab equipment] (though equipment shortages will limit upside to some degree) and then a clear picture to growth in CY22–is $90 billion or more now on the table?”
Muse has an in-line rating on Intel’s stock and boosted his price target to $75 from $68.
He ranks ASML Holding NV ASML, +5.11% as his top chip-equipment pick, followed by Applied Materials Inc.
AMAT, +6.32%, Lam Research Corp.
LRCX, +2.98%, and KLA Corp.
Applied Materials shares shot up 6.9% in Wednesday trading, to pace the S&P 500 index’s SPX, +0.05% gainers.
ASML shares are up 5.7%, while Lam Research shares are up 3.9%, and KLA shares are up 4.7%.
Intel’s stock has gained 35% over the past three months, as the Dow Jones Industrial Average DJIA, +0.43% has risen 8.5%.
stock fell after hours Tuesday after the retailer says it has laid the groundwork for its "transformation" despite lower-than-expected adjusted fourth-quarter earnings and sales.
Emily Bary is a MarketWatch reporter based in New York.
Intel stock Intel stock
Wed, 24 Mar 2021 10:00:00 -0700
The logo for the Intel Corporation is seen on a sign outside the Fab 42 microprocessor manufacturing site in Chandler, Arizona, U
, October 2,
and finanzen.net GmbH (Imprint).
All rights reserved.
Intel's plan to reinvest billions of dollars into chip production may weigh on the company's stock price in the near term, according to Wedbush analyst Matt Bryson.
On Tuesday evening Intel CEO Pat Gelsinger laid out "IDM 2.0," his vision for Intel to invest in manufacturing.
The plan involves spending $20 billion to build two new chip factories in Arizona, where Intel will manufacture its own chips and act as a "foundry," or manufacturing partner, for third party chip designers.
Bryson said that while Intel's course of action is largely ideal, it will be costly and time consuming and a drag on the stock.
For example, Intel is building its first 7 nanometer chip, but it won't be shipped until 2023, later than the company previously suggested.
The analyst has a 12 month price target of $53 for Intel, a roughly 15% drop from current levels.
Bryson also holds an "underperform" rating for Intel.
Shares of the chipmaker opened up 4.8% Wednesday but then pared gains throughout the morning.
The stock is currently hovering around $63, bringing Intel's year-to-date gains to nearly 27%.
"We believe that Pat Gelsinger is doing absolutely the right thing for Intel by reinvesting in the company, but that his actions will almost necessarily weigh on earnings and cash flow over the next 2-3 years," Bryson said.
"This conclusion is perhaps best illustrated by Intel's guidance for $10B in cashflow in 2021, well below the $17.3B consensus despite a sales outlook of $72B, in-line with prior consensus at $72.65B.
Really, our only question around INTC's strategy is how it will manage to act as both a customer and competitor with foundry partners."
– March 24, 2021