Get 40% Off
🚀 Our AI Picked 6 Stocks that Jumped +25% in Q1. Which Picks Will Soar in Q2?Unlock full list

Wolfe Research bearish on Intel stock amid concerns over startup costs and margins

EditorEmilio Ghigini
Published 04/03/2024, 06:34 AM
Updated 04/03/2024, 06:34 AM

On Wednesday, Wolfe Research maintained its underperform rating for Intel Corporation (NASDAQ:INTC) stock with a steady price target of $31.00. The firm highlighted concerns about the impact of startup costs and outsourcing on the technology giant's profit margins through the calendar year 2025 (CY25).

The firm's analysis pointed out that while Intel's management expects startup costs to peak in the calendar year 2024 (CY24), these expenses will continue to pose a significant challenge in CY25. Furthermore, the anticipated ramp-up of Intel's 18A processor production in the second half of 2025 (2H25) is not expected to significantly benefit the profit and loss statement until CY26. This is when a larger volume of processor tiles is projected to transition from external to internal production.

Wolfe Research's statement underscored that the peak of startup costs and outsourcing pressures in CY24 could lead to some incremental improvement in margins for the following year. However, the firm remains cautious about Intel's near-term financial outlook due to these ongoing cost factors.

InvestingPro Insights

In light of Wolfe Research's underperform rating for Intel Corporation (NASDAQ:INTC), InvestingPro data and tips provide additional context for investors. Intel's current Market Cap stands at $187.05 billion, with a high Price/Earnings (P/E) Ratio of 108.68, which further increases to 116.94 when adjusted for the last twelve months as of Q4 2023. Despite a revenue decline of 14.0% in the same period, the company has seen a quarterly revenue growth of 9.71% in Q1 2023.

Two InvestingPro Tips that stand out are Intel's expected net income growth this year, which may signal a positive turn in profitability, and its status as a prominent player in the Semiconductors & Semiconductor Equipment industry. The latter is particularly relevant as the company navigates through the startup costs and outsourcing challenges highlighted by Wolfe Research. Additionally, Intel has maintained dividend payments for 33 consecutive years, which could be a sign of the company's commitment to shareholder returns despite the current financial pressures.

For investors seeking a deeper analysis, there are more InvestingPro Tips available, including insights on Intel's valuation multiples and profitability predictions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for further expert advice. With these insights, investors can better understand the financial landscape of Intel as they weigh the Wolfe Research rating against the company's market performance and future prospects.

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

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.