Dow component Intel beat Q1 2020 estimates in April, posting $1.45 earnings-per-share (EPS) on $19.83 billion in revenue. However, the chip giant also warned that Q2 results would not meet expectations, lowering EPS guidance to $1.10. Not surprising, they didn’t offer annual profit or revenue guidance due to continued uncertainly, driven by the pandemic. The company is scheduled to report Q2 2020 earnings on July 23.
The semiconductor sector held up well in the first quarter, with idled workers turning to virtual meetings, digital communications, and video gaming. Intel has benefited from this usage because the pandemic has bolstered sagging demand for personal computers and video gaming consoles. However, smartphones have yet to show a 2020 sales uptick, undermining one source of steady income.
KeyBanc’s Weston Twigg just upgraded the stock to ‘Overweight’, highlighting their competitive advantages. He noted the company is “aggressively tackling new markets, quickly launching products on 10nm, and unifying chips, software, and developers.” He also mentioned that CEO Bob Swan “appears to be gaining confidence”, shaking the company out of its “recent malaise.” Swan took the helm in January 2019 from former CEO Brian Krzanich. Twigg has established a price target of $82, or 16 times the firm’s 2021 EPS estimate of $5.12.
Wall Street analysts have been mixed on the mega-cap’s long-term outlook so far in 2020, providing 11 ‘Buy’, 15 ‘Hold’, and 3 ‘Sell’ recommendations. Price targets range from a low at $51 and a high at $85. The stock is now trading about $3.00 below the median $64.25 target. COVID-19 has weighed on these ratings, with the company now forced to prove it can prosper in the new landscape.
Intel Price Action
Intel has failed to match the outstanding performance of high tech peers in recent years. The stock slumped through the first half of the last decade due to an ‘old school’ approach by the former CEO, who departed in 2018. It’s gained ground in the last 5 years but is still trading more than 14 points under the all-time high posted in 2000. This compares unfavorably with the Nasdaq-100 index, which has more than doubled in price during the same period.
This article was originally posted on FX Empire
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