Intel’s (NASDAQ:INTC) share price fell 9% in Friday’s trading session, leaving investors at odds over when it will hit a bottom. The proximate cause for concerns among investors is the company’s gross margin growth, which might drop in the fourth quarter. Furthermore, a major topic of discussion was Intel’s 10nm roadmap, where it has been experiencing yield issues, resulting in delays.
However, top analyst Craig Ellis of B.Riley FBR remains bullish on INTC stock, reiterating a Buy rating, while slightly lowering the price target to $63 (from $65), which implies an upside of 32% from current levels.
Ellis commented, “We see numerous positives, but also two key negatives, though we believe INTC remains well positioned for solid revenue growth and compelling EPS growth long term. On the plus side, 2Q/3Q sales are $62M/$375M above our recently raised forecasts, Data Center unit and ASP trends are strong, Y/Y PC unit growth is led by strong and high-margin enterprise and gaming demand, opex management is driving pleasantly-surprising operating leverage, and CY18’s revenue and EPS bogeys jumped $2.0B/+3.0% and $0.30/+7.8% to $69.5B/$4.15. So, persuasive evidence a Data Centric strategy is working. However, implied 4Q18 GM dip toward 60.0%, hurting EPS, and 10nm products arrive for 2019 holidays, the late launch lending share concerns. Capex rose $0.5B to $15.0B, though we argue discipline persists given our prior warnings about upside volume pressure. Overall, we believe execution is on track while longerterm cash generation and return are favorable.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Craig Ellis has a yearly average return of 37.1% and a 79% success rate. Ellis has a 23.2% average return when recommending INTC, and is ranked #1 out of 4842 analysts.
Cautious optimism circles this chip giant, as TipRanks analytics exhibit INTC as a Buy. Out of 27 analysts polled in the last 3 months, 11 are bullish on Intel stock, 13 remain sidelined, and 3 are bearish on the stock. With a return potential of nearly 17%, the stock’s consensus target price stands at $55.86.