It seems like everyone and their uncle hates Intel (NASDAQ: INTC)today. This goes to show how fickle the market is, but I encourage you to look at the big picture and make your own decisions. When the dust settles for a while, I expect the market will appreciate Intel again, and I’m bullish on INTC stock over the long term.
Intel is a chipmaker that, unlike some of the company’s competitors, actually makes its own microchips. There’s no doubt that owning a foundry business is risky, but that’s what sets Intel apart.
Today’s INTC stock sell-off is a textbook example of how investor sentiment can change quickly. In just one year, Intel went from doghouse to darling and back again. However, don’t be discouraged by the market’s wild mood swings, as irrational mood swings lead to volatility, which in turn creates opportunities.
The good news no one talks about
Inco Stock Down 12% today, despite multiple positive news reports.In fact, the market is so focused on Intel Quarterly Reports and Forward Guidance It completely ignores some important developments about Intel.
First, Intel just celebrated the opening of the company’s factory in Rio Rancho, New Mexico, which Keyvan Esfarjani, Intel’s executive vice president and chief global operating officer, said represents “the opening of Intel’s first high-volume semiconductor business and its only An American factory that mass-produces the world’s most advanced packaging solutions.”
In addition, Intel also announced its cooperation with Taiwan United Microelectronics Corporation (UMC) (NYSE: UMC) to develop “12nm semiconductor process platforms to meet the needs of high-growth markets such as mobile, communication infrastructure and networks.” Interestingly, Intel is cooperating with Taiwanese foundries such as UMC.
By partnering with Taiwan, are Intel and UMC ready to grab significant market share from Taiwan Semiconductor (NYSE:TSM)? This is a question that should be considered, but almost no one thinks about it today.
Markets can’t tolerate cautious guidance
Frankly, the market is so spoiled that it can no longer tolerate anything short of over-the-top raises across the board. Sometimes, there are over-the-top raises, but earnings over-the-top and/or indicative raises aren’t enough to impress investors. It’s a strange phenomenon – but again, irrationality can lead to opportunities.
With its results in the fourth quarter of fiscal 2023, Intel has certainly achieved the “beat” part of the “beat and raise” formula. Intel CEO Pat Gelsinger had every right to brag: “Our fourth quarter results were strong and exceeded expectations. For the fourth consecutive quarter, revenue was at the high end of our guidance.”
The summary is as follows: Intel’s quarterly revenue increased 10% year-on-year to $15.4 billion, exceeding analysts’ consensus expectations of $230 million.Additionally, Wall Street calls for Intel to announce Fourth fiscal quarter 2023 earnings per share of $0.45but the company actually earned $0.54 per share.
When INTC doubled from $24 to $50, you might think Intel’s quarterly results would send the stock higher. However, Intel hasn’t delivered on the “raise” part of the mix that people expected these days.
Additionally, despite Wall Street forecasting adjusted earnings of $0.32 per share for the first quarter of 2024, Intel management guided for just $0.13 per share.
Given this, many analysts are cautious about INTC stock. Two examples are Bernstein’s Stacy Rasgon and Stifel Nicolaus’ Ruben Roy, who recently issued a hold/neutral rating on Intel stock. Additionally, Rasgon’s stock is rated Hold/Neutral. Target price $42 and Roy’s Target price $45 Not particularly optimistic.
Think about it – Intel stock will barely move over the next 12 months to hit these price targets. However, the company’s results demonstrated Intel’s ability to beat Wall Street’s financial expectations. Now, expectations for the current quarter are pretty low, and don’t be too surprised if another earnings uptick occurs – although I can’t guarantee earnings growth, which everyone seems to be asking for right now.
Do analysts think Intel stock is a buy?
On TipRanks, INTC is rated a Hold based on 7 Buy ratings, 24 Hold ratings, and 4 Sell ratings from analysts in the past three months. Intel Average Stock Price Target At $46.38, it implies an upside potential of 6.5%.
Conclusion: Should You Consider Intel Stock?
Intel set the bar low for this season. Investors didn’t respond well to this, but that’s how opportunities present themselves. All of this may just set the stage for another earnings boost and more optimistic guidance in a few months.
It’s hard to imagine a good outcome when market sentiment toward Intel is so negative. Remember, though, investors were favoring Intel just a few days ago. I predict they’ll appreciate Intel again, so I think it’s a smart move to consider INTC stock as its price drops.