RBC Capital’s Take On Intel Corporation (INTC) Following Investors Meeting

RBC Capital analyst Amit Daryanani offers a look into shares of Intel Corporation (NASDAQ:INTC) on back of recently hosting investor meetings as well as speaking to Director of Intel’s Investor Relations, Mark Henninger. After these meetings, Darvanani left with five key takeaways.

First, by 2H16 data center growth will ride a wave of momentum to double-digits, thanks to enterprise stability, CSPs growth, and ASP uplift from Broadwell.

Second, because of capacity ramps, which Darvanani attributes to Dailan, decreases in memory segment should mirror those of 1H16.

Third, Darvanani looks to autonomous driving as a potential driving factor of TAM expansion when placed in the context of L5 autonomous driving.

Fourth, “Machine learning and deep learning are growing fast, as buildouts scale, INTC views Xeon and Xeon Phi as a winner vs. other architectures,” Darvanani notes.

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Darvanani’s final takeaway indicates the precipice of a partnership between INTC and its customers, where high performance computing and high density transistors will take the front seat in priority value. However, Darvanani does note the company does not intend in its foreseeable future to evolve into a general purpose foundry like TSMC/Global Foundries.

The analyst concludes, “We see Intel’s PC business continuing to decline, limiting Intel’s revenue growth rate from returning to historical norms. However, we see secular growth drivers in Data Center and Internet of Things more than offsetting PC headwinds, driving single-digit y/y revenue growth and some operating profit improvements. We also see Altera contributing modestly to EPS accretion over a multi-year time frame.”

Darvanani reiterates a Sector Perform rating on shares of INTC with a $36 price target.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, four-star analyst Amit Daryanani is ranked #667 out of 4,129 analysts. Daryanani has a 64% success rate and garners 3.2% in his yearly returns.

TipRanks analytics demonstrate INTC as a Buy. Based on 28 analysts polled in the last 3 months, 18 rate a Buy on INTC, 7 maintain a Hold, while 3 issue a Sell. The 12-month average price target stands at $38.13, marking a 6% upside from where the shares last closed.

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