Intel Corporation (INTC) Has Had a Good Year; Top Analyst Bets 2018 Could Be Even Better

One of the best performing analysts on Street, Mizuho's Vijay Rakesh pinpoints a lower tax rate and long-term cash repatriation as advantages that could bring upside to INTC come 2018.


Top analyst Vijay Rakesh at Mizuho likes Intel Corporation (NASDAQ:INTC) chances for 2018 upside, even spotlighting a chip giant in solid standing as the new year rolls around. Keep in mind, this is a stock that gained past 100% in value throughout the last 12 months. Even as the analyst wonders if short-term Street-wide expectations hover slightly tall, he nonetheless believes that “a better 2018 [is] shaping up” for Intel.

As such, ahead of what could be a 2018 full of gains for the semiconductor company, the analyst reiterates a Buy rating on INTC stock with a $47 price target, but notes he intends to review his expectations “closer to earnings.”

Rakesh underscores, “Post a solid run in 2017, we believe INTC is well-positioned for 2018. That said, near-term we believe MarQ consensus estimates are modestly high against a backdrop of more seasonal PC/Data Center demand and modest iPhone/ NAND demand. Overall, 2018 could shape up better as INTC should be a key beneficiary of a lower U.S corporate tax rate and a potential substantial overseas cash repatriation to drive shareholder value.”

“We believe MarQ-2018 consensus PC expectations are modestly above ODM expectations of a more seasonal MarQ. In MarQ 2017 against PC expectations of down ~10-15%, INTC delivered a down ~13% q/q PC client revenue. Current MarQ PC Client consensus revenues are down ~10-11% q/q and could be optimistic. On the other hand, we believe while MarQ Data Center (DC) tend to be seasonal post a strong DecQ, new Purley ramps should be a modest offset. INTC had noted ~200 OEM DC wins with its Purley processors,” adds the analyst.

Meanwhile, even if short-term iPhone 8 ramps have not been as strong as they could have been, the analyst looks for “some offset” in the second fiscal quarter from “modest” iPhone X ramps. With an AVGO takeover of QCOM not a real “threat” from Rakesh’s perspective yet as the agreement prospectively will only wrap up the close of 2018 and a $2 billion NAND prepayment for a 64-L 3D NAND supply deal primed to be a “tailwind” through the new year, the analyst anticipates “upside” lies ahead for this chip giant.

Looking ahead to fiscal 2018, Rakesh forecasts INTC will hit $63.9 billion in revenue and $3.26 in EPS, achieving $66.5 billion in revenue and $3.34 in EPS by fiscal 2019.

Vijay Rakesh has a very good TipRanks score with a 71% success rate and a high ranking of #26 out of 4,724 analysts. Rakesh garners 29.7% in his yearly returns. When recommending INTC, Rakesh realizes 21.6% in average profits on the stock.

TipRanks highlights a cautiously optimistic Street surveying this chip giant. Based on 23 analysts polled in the last 3 months, 16 are bullish on Intel stock, 6 remain sidelined, while 1 is bearish on the stock. The 12-month average price target stands at $46.68, aligning with current trading levels.