How are Intel’s (NASDAQ:INTC) odds for upside heading into tonight’s first quarter financial results? Top analyst Amit Daryanani at RBC Capital says good, seeing Intel in solid standing to beat out consensus expectations for the first quarter “and beyond.” In the spotlight are Data Center growth, trends in PC that are faring far “better-than-feared,” and a ramping up in memory revenue.
As such, though the analyst maintains a Sector Perform rating on INTC stock, he bumps up the price target from $46 to $54, which implies a 3% upside from current levels.
For the first quarter, the analyst now tweaks up his revenue expectations to $15.2 billion and boosts his EPS forecast to $0.72, aligning with consensus expectations calling for $15.1 billion in revenue and $0.71 in EPS. For the second quarter, Daryanani bets INTC can deliver $15.6 billion in revenue and $0.83 in EPS against the Street’s estimates of $15.6 billion and $0.81. For the full year of 2018, the analyst angles for $65.7 billion in revenue from Intel and $3.64 in EPS, which soars above the Street’s expectations of $65.1 billion and $3.56.
“On the DCG front, we continue to see upside in DCG driven by Purley cycle and healthy trends in cloud capex. We see upside not just from hyperscale demand but also from legacy enterprise companies seeing an uptick (HPE/Dell/Lenovo trends have been incrementally better). Furthermore, we think there could be incremental demand for servers in H2:18 as performance of specific workloads could be impacted by security patches and customers may need to think about incremental capacity. Finally, March-qtr PC data points to a better-than-feared trend,” writes Daryanani.
Some key points to watch for the quarter include: “1) Commentary around DCG – While strong Dec-qtr results could make the q/q compare more difficult, healthy cloud capex and potential incremental server demand (due to impact on performance from the security patches) could drive the upside. 2) PC Trajectory – Mar-qtr PC data is better than feared. We look for updates on ASP and competitive landscape. 3) Memory – More clarity on growth acceleration and path towards margin expansion,” concludes Daryanani, likewise keeping an eye on both operating expense control as well as mobile dynamics.
Amit Daryanani has a very good TipRanks score with a 78% success rate and a high ranking of #21 out of 4,774 analysts. Daryanani yields 26.0% in his annual returns. When recommending INTC, Daryanani earns 0.0% in average profits on the stock.
TipRanks indicates INTC has positive sentiment hovering over shares. Out of 22 analysts polled in the last 3 months, 14 are bullish on the chip giant, 5 remain sidelined, while 3 are bearish on the stock. With a solid return potential of nearly 13%, the stock’s consensus target price stands at $57.93.