Intel buying chip designer Altera for about $16.7 billion
FILE - In this Jan. 7, 2010, file photo, people are silhouetted in front of the Intel sign at the International Consumer Electronics Show (CES) in Las Vegas. Microchip maker Intel is buying chip designer Altera for about $16.7 billion in cash, the company announced, Monday, June 1, 2015. (AP Photo/Laura Rauch, File)
Top analyst Vijay Rakesh at Mizuho likes Intel Corporation (NASDAQ:INTC) chances for 2018 upside, even spotlighting a chip giant in solid standing as the new year rolls around. Keep in mind, this is a stock that gained past 100% in value throughout the last 12 months. Even as the analyst wonders if short-term Street-wide expectations hover slightly tall, he nonetheless believes that “a better 2018 [is] shaping up” for Intel.
As such, ahead of what could be a 2018 full of gains for the semiconductor company, the analyst reiterates a Buy rating on INTC stock with a $47 price target, but notes he intends to review his expectations “closer to earnings.”
Rakesh underscores, “Post a solid run in 2017, we believe INTC is well-positioned for 2018. That said, near-term we believe MarQ consensus estimates are modestly high against a backdrop of more seasonal PC/Data Center demand and modest iPhone/ NAND demand. Overall, 2018 could shape up better as INTC should be a key beneficiary of a lower U.S corporate tax rate and a potential substantial overseas cash repatriation to drive shareholder value.”
“We believe MarQ-2018 consensus PC expectations are modestly above ODM expectations of a more seasonal MarQ. In MarQ 2017 against PC expectations of down ~10-15%, INTC delivered a down ~13% q/q PC client revenue. Current MarQ PC Client consensus revenues are down ~10-11% q/q and could be optimistic. On the other hand, we believe while MarQ Data Center (DC) tend to be seasonal post a strong DecQ, new Purley ramps should be a modest offset. INTC had noted ~200 OEM DC wins with its Purley processors,” adds the analyst.
Meanwhile, even if short-term iPhone 8 ramps have not been as strong as they could have been, the analyst looks for “some offset” in the second fiscal quarter from “modest” iPhone X ramps. With an AVGO takeover of QCOM not a real “threat” from Rakesh’s perspective yet as the agreement prospectively will only wrap up the close of 2018 and a $2 billion NAND prepayment for a 64-L 3D NAND supply deal primed to be a “tailwind” through the new year, the analyst anticipates “upside” lies ahead for this chip giant.
Looking ahead to fiscal 2018, Rakesh forecasts INTC will hit $63.9 billion in revenue and $3.26 in EPS, achieving $66.5 billion in revenue and $3.34 in EPS by fiscal 2019.
Vijay Rakesh has a very good TipRanks score with a 71% success rate and a high ranking of #26 out of 4,724 analysts. Rakesh garners 29.7% in his yearly returns. When recommending INTC, Rakesh realizes 21.6% in average profits on the stock.
TipRanks highlights a cautiously optimistic Street surveying this chip giant. Based on 23 analysts polled in the last 3 months, 16 are bullish on Intel stock, 6 remain sidelined, while 1 is bearish on the stock. The 12-month average price target stands at $46.68, aligning with current trading levels.