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Susquehanna cuts Intel stock target, keeps neutral stance

EditorAhmed Abdulazez Abdulkadir
Published 04/17/2024, 01:28 PM
INTC
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On Wednesday, Susquehanna maintained its Neutral rating on shares of Intel Corporation (NASDAQ:INTC) but reduced the price target to $40.00 from the previous $42.00. The firm anticipates that Intel's first-quarter earnings and guidance, due to be reported on April 25, will likely align with or be slightly weaker than expectations.

This is attributed to satisfactory Client segment shipments but a noted weakness in Server segments ahead of new product launches slated for the second half of the year.

The analysis by Susquehanna highlighted that while Intel's Client segment showed signs of strength, with positive PC checks indicating better-than-expected notebook Original Design Manufacturer (ODM) builds and PC sell-through, the Server segment presented a different picture.

Despite a pickup in March, checks for the Data Center and AI (DCAI) segment were weaker at the start of the quarter. The upcoming launches of Sierra Forest and Granite Rapids are expected to be slow to ramp up, which could be a downside for the company.

Intel's Client segment saw an increase in laptop and desktop CPU market share, with laptop share reaching its highest since the first quarter of 2022, driven by the Raptor Lake refresh. However, the new Meteor Lake represented only about 0.2% of Intel's laptop mix after its launch in December, indicating a slower ramp-up, which might improve in the latter half of the year.

The report also addressed the challenges faced by Intel's other segments. The Altera segment is undergoing a significant inventory correction expected to last through the first half of 2024, while Mobileye's performance may align with projections following an early correction.

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The Internet of Things (IoT) is predicted to grow, but telecommunications is likely to continue dragging on performance throughout the year. Additionally, Intel's Foundry business is projected to impact financials until at least 2026.

In terms of financials, Susquehanna expects Intel to maintain in-line margins in the first quarter, with an improvement as the year progresses due to increased volumes.

Despite the lowered price target, the firm holds a view that Intel could show strength moving into the second half of the year, with an estimated 3.5 times 2024 expected enterprise value to sales ratio.

InvestingPro Insights

As Intel Corporation (NASDAQ:INTC) approaches its earnings report on April 25, analysts and investors are closely monitoring the company's performance metrics. According to InvestingPro data, Intel currently has a market capitalization of $154.35 billion and is trading at a high earnings multiple, with a P/E ratio of 96.5 based on the last twelve months as of Q4 2023. Despite a challenging revenue growth rate of -14.0% during the same period, the company did see a quarterly revenue growth of 9.71% in Q1 2023, indicating potential pockets of resilience within its operations.

InvestingPro Tips highlight Intel's status as a prominent player in the Semiconductors & Semiconductor Equipment industry and its impressive track record of maintaining dividend payments for 33 consecutive years. Moreover, analysts predict profitability for the year, supported by Intel's positive net income growth expectations. With 6 additional tips available on InvestingPro, investors can delve deeper into Intel's financial health and future prospects. To gain access to these valuable insights, use the exclusive coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

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As Intel navigates through its segments' varying performance and the anticipation of new product launches, these metrics and insights will be crucial for stakeholders to assess the company's potential for a stronger second half of the year, as suggested by Susquehanna's analysis.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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