Intel Corporation (NASDAQ:INTC) shares initially glided up 7% on Friday after the chip giant spun out quarterly results that Roth Capital analyst Suji Desilva believes were favored by solid clientele as well as exciting gains in data-centric segments, praising the “transformation.”
On back of the strength of the print, the analyst maintains a Buy rating on INTC stock while bumping up the price target from $43 to $50, which implies an 11% increase from current levels.
For the third quarter, Intel outclassed consensus on revenue, and the analyst notes this is factoring in an adjustment for specific one-time items. With surges across data center segments from cloud service provider experiencing 24% year-over-year growth, NVM solutions group firing up 37% year-over-year gains, and communications service providers on a marked 9% year-over-year incline, the analyst cheers: “We believe INTC is seeing its strongest growth certain data center segments.”
Secular demand carried by customers among cloud and communications looks encouraging to the analyst, who likewise praises revving “healthy memory market momentum.” With the INTC team boosting its 2017 full year outlook once more, Desilva takes this as an encouraging sign, calling for 2018 to glimmer with initiatives backing automotive, artificial intelligence (AI) machine learning, as well as communications.
Moreover, the analyst expands his soaring confidence in this stock pick, elaborating, “We are also incrementally constructive on INTC given the stability y/y in the client group, where improving mix and ASP are offsetting a continued shrinking in the overall PC unit TAM. Coupled with healthy top-line trends, we regard the improving operating profitability as a strong indicator of the focused growth plan of the company, and expected greater EPS growth in the coming quarters.”
Ultimately, Desilva anticipates this strength to continue to fire on all cylinders, contending: “We expect INTC data center and memory groups to continue to benefit from strong hyperscale demand, and regard the steady upgrade cycle around newer Xeon Scalable products to represent a multi-quarter tailwind for the company. We have raised our EPS forecasts reflecting a more favorable outlook across multiple segments as well as recovering operating profitability.”
Wall Street likes this chip maker, even if it is not quite a top pick, with TipRanks analytics demonstrating INTC as a Buy. Based on 28 analysts polled by TipRanks in the last 3 months, 15 rate a Buy on Intel stock, 9 maintain a Hold, while 4 issue a Sell on the stock. The 12-month average price target stands at $44.25, marking a nearly 2% downside from where the stock is currently trading.