A Glimpse into Intel (INTC) Before the Earnings Curtain Rises

Computer chip giant Intel (NASDAQ:INTC) will be showing off its second-quarter earnings next Thursday, July 26. In a sense, the numbers that the company will put out aren’t going to be that interesting, as it already announced in June that revenue for the quarter totaled $16.9 billion and EPS came in at $0.99. Both figures were vastly ahead of analysts’ expectations. However, management will likely provide an updated outlook for the full year during the 2Q18 earnings call.

BMO Capital analyst Ambrish Srivastava commented, “Well, safe to say a fair bit has changed since the company’s last earnings call. Intel is without a permanent CEO after the ouster of Brian Krzanich. As we indicated in our note at that time, it is never easy when the CEO is fired at a company whose shares one is recommending or owning. The questions that arise, among the obvious ones, include who will Intel pick to lead, how committed he or she will be to the strategy of the former CEO—particularly around what were Mr. Krzanich’s two ‘babies,’ the acquisitions of Altera and Mobileye—not to mention the C-level churn that usually accompanies a change at the top. Meanwhile, fundamentals continue to look strong for the company. Our estimates are not comparable to consensus estimates, as it does not appear that the recently updated guidance by Intel is reflected in consensus estimates.”

“Our 2018/2019 estimates move up, largely driven by higher revenue. We now expect 2018/2019 revenues of $68.2 billion/$70.0 billion, up 9%/3% y/y and GAAP EPS of $4.00/$4.10 vs. our prior estimates of $67.5 billion/$70.0 billion, up 8%/4% y/y and $3.79/$4.06, respectively,” the analyst added.

Net net, Srivastava reiterates an Outperform rating on Intel shares, with a price target of $62, which implies an upside of 20% from current levels. (To watch Srivastava’s track record, click here)

Ultimately, Wall Street is not completely sure about this chip giant, but the optimists still win out in the bigger picture. Out of 29 analysts polled by TipRanks in the last 3 months, 16 rate a Buy on INTC, 9 maintain a Hold, while 4 issue a Sell. The 12-month average price target notably stands at $59.24, marking a healthy return potential of 15% from current levels. 

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