Roth Capital Maintains Buy On Intel On The Back Of Good 3Q14 Results And Guidance


In a report issued Wednesday, Roth Capital analyst Krishna Shankar maintained a Buy rating on Intel (NASDAQ:INTC) with a price target of $38, as the company reported good 3Q14 results with revenues/EPS of $14.554 billion/$0.66 (Street @ $14.45 billion/$0.65) and 65% gross margins due to strong enterprise PC and datacenter demand trends with seasonal guidance of 1% sequential growth.

Shankar said, “We believe that the enterprise PC replacement cycle may last several quarters, coupled with continuing strength in high-margin datacenter server processors. Areas of concern include continuing losses in the tablet/smartphone segment, peaking gross margins, and potential for weak PC sell-through due to a softening macro environment.”

The analyst explained, “We expect healthy revenue growth in datacenter for server, networking, storage, software platforms and a recovery in high-margin enterprise and SOHO PC demand offset by continuing challenges in consumer PC market and operating losses in the smartphone/tablet market. Intel has indicated that it is on track to quadruple tablet units to 40 million in 2014 through aggressive design win and pricing efforts, together with a recent partnership with Chinabased RockChip to jointly develop low-cost quad-core Atom SoC processor platforms with 3G wireless capabilities for the low-cost Android tablet market. Intel is also investing $1.5 billion in Tsinghua UniGroup (parent company for Spreadtrum and RDA, Inc) to develop Intel architecture-based smartphone platforms. Within PCs, Intel is seeing pockets of strength in convertible 2-in-1 PCs, hybrid notebook/tablets, all-in-one desktop PCs, and high-end gaming PCs. In the smartphone segment, Intel is retrenching to focus on leading OEMs rather than a blanket effort and accelerating Atom-based smartphone SOC platform development for high-end standalone application processor applications and low-end/mid-range integrated platforms with applications processor and integrated LTE/3G baseband.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Krishna Shankar has a total average return of 4.4% and a 44.4% success rate. Shankar has a 9.2% average return when recommending INTC, and is ranked #927 out of 3332 analysts.

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