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UBS raises Intel stock target on Foundry outlook

EditorAhmed Abdulazez Abdulkadir
Published 04/01/2024, 06:02 AM

On Monday, UBS updated its stance on Intel Corporation (NASDAQ:INTC), increasing the stock's price target to $50 from the previous $46 while keeping a Neutral rating. The adjustment follows Intel's announcement about restructuring its profit and loss (P&L) statement to better reflect the distinct operations of its manufacturing and product groups.

The firm indicated that the revision was prompted by a new analysis of Intel's financial structure, particularly focusing on the prospects of the Intel Foundry Services (IFS) division, which is now being emphasized as a separate segment. This analysis led to a more favorable view of the potential revenue and margins for IFS, which in turn justified the higher price target.

Intel's decision to re-segment its P&L is part of a strategic move to delineate its manufacturing capabilities from its product divisions. This reorganization is expected to provide more transparency into the performance of each segment, which could be particularly beneficial for the newly highlighted Intel Foundry Services.

UBS acknowledged the potential for Intel Foundry's revenue and margin improvements but maintained a Neutral rating on the stock. The firm cited Intel's challenges in key growth areas such as artificial intelligence (AI), which continues to affect the company's competitive position in the industry.

The updated price target reflects UBS's cautious optimism about Intel's ability to capitalize on its manufacturing segment's strengths while recognizing the ongoing hurdles the tech giant faces in expanding its market share in rapidly advancing sectors.

InvestingPro Insights

In light of UBS's updated price target and the strategic reorganization of Intel Corporation (NASDAQ:INTC), current real-time data from InvestingPro provides additional context for investors considering the stock. Intel's market capitalization stands at a robust $188.03 billion, signaling its significant presence in the industry. Despite a challenging revenue growth rate of -14.0% over the last twelve months as of Q1 2023, the company has experienced a quarterly revenue growth of 9.71% in Q1 2023, indicating potential for recovery and growth in the near term.

Moreover, Intel's firm commitment to shareholder returns is evidenced by its track record of maintaining dividend payments for 33 consecutive years. Investors may also find the company's gross profit margin of 40.04% to be a strong point, showcasing its ability to maintain profitability amidst industry headwinds.

For those seeking further insights, InvestingPro offers additional tips on Intel, including expectations of net income growth this year and its status as a prominent player in the Semiconductors & Semiconductor Equipment industry. There are 8 more InvestingPro Tips available, which can provide a deeper analysis for those considering an investment in Intel. To access these tips and more, visit https://www.investing.com/pro/INTC and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

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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