By Senad Karaahmetovic
Cowen analysts reinstated research coverage on Intel (NASDAQ:INTC) with a Market Perform rating and a $31 per share price target.
Although there is hope that Intel has started to see some bright light, the analysts note it’s still a “very long tunnel.” The company is facing "difficult" two years after a “rough” 2022, with Intel expected to continue losing its market share in Datacenter. Moreover, the declining PC market is negatively impacting Intel’s cash generation.
“Investors, once focused on a potential product turnaround, are now primarily concerned with the defense of Intel's dividend. The key to Intel's turnaround is its long-term node progression, and the company needs to spend ~$50B in capex against a financial model only generating ~$35B in cash over the next couple years. In our view, the dividend is safe (barely), but Intel continues to face material cash flow headwinds in the coming year(s),” they said in a client note.
The analysts see Intel returning to growth in 2024, although they are below consensus for 2023. Several headwinds are mentioned, including server roadmap delays, declining PC TAM, and significant capex requirements.
At current market prices, Intel shares are “fairly valued,” the analysts concluded.
At 09:00 EST (14:00 GMT), Intel stock is down 0.5% in pre-market trading.