Merrill Lynch analyst Vivek Arya provides insight on shares of Intel Corporation (NASDAQ:INTC) on the heels of hosting investor meetings with CEO Brian Krzanich and IR head Trey Campbell in Chicago this past Monday and Tuesday.
For Arya, the tech giant remains a “top pick,” and in light of five key takeaways, reiterates a Buy rating on INTC with a price target of $42, which represents just under a 17% increase from where the shares last closed.
First, Arya praises INTC for considerable growth in cloud computing, “Internet-of-Things,” memory, autonomous cars, 5G wireless, gaming/VR.
Second, the analyst recognizes a focus for INTC management on a fresh rack-scale plan for data center specifically, offering full processor suite, silicon photonics, interconnects, memory, rival-trouncing level software, and greater stickiness.
Fourth, “ARM license could help attract foundry customers (we expect Apple to become one by 2018),” Arya believes.
Fifth, Arya notes, “At parity in 4G wireless, early in 5G. Overall we see INTC as a ~4-5% topline and 9-10% EPS grower, paying 3%+ div yield, and trading at attractive 13x 2017 PE vs. peers at 20x. We expect this gap to close in 2H as INTC’s data center biz returns to 10%+ growth and as PC market stabilizes.”
Ultimately, though data center growth and competition appeared to dwarf the company considering its weak 1H sales growth, the analyst finds INTC management “comfortable with 2H recovery” and expects the company to be in a stellar position to gain 30% or more shares of Apple’s forthcoming iPhone 7 launch.
“The 2018 Korea Olympics could be key testing ground for 5G and we expect INTC to be prominent,” he concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Vivek Arya is ranked #295 out of 4,132 analysts. Arya has a 55% success rate and yields 11.9% in his annual returns. When recommending INTC, Arya earns 3.5% in annual profits on the stock.
TipRanks analytics indicate INTC as a Buy. Based on 28 analysts polled in the last 3 months, 18 rate a Buy on INTC, 7 maintain a Hold, while 3 issue a Sell. The consensus price target stands at $38.13, marking a nearly 6% upside from where the stock is currently trading.