Intel Beat Expectations, but Lowered Guidance

Once the industry leader in processor manufacturing, the Intel Corporation (INTC) lost its luster over time, as foreign firms like TSMC and Samsung began to develop the thinner, more advanced 7nm wafers necessary for high-capacity electronics. Now, though, Intel is going back for the crown. Intel posted impressive earnings results yesterday, beating Wall Street consensus estimates on both revenue and EPS.  

The multinational semiconductor company has heavily invested in several domestic fabrication plants, and its existing new generation of Sapphire Rapids processors are expected to hit the market this coming quarter.  

While the Q4 2021 Intel earnings report results were largely optimistic, Quinn Bolton of Needham & Co. was unimpressed by the lower-than-expected guidance. He wrote that this “dampened the mood” and that the operating expenses of new fab development has tightened margins. Despite these factors, Bolton remained bullish.  

The five-star analyst rated the stock a Buy, and included a price target of $60 per share. This suggests a 12-month upside potential of 22.05%.  

Adding to his list of headwinds to the company’s guidance, Bolton mentioned “industry-wide supply chain constraints, seasonality, and PC notebook inventory burn.” He argued that OEMs (original equipment manufacturers) have now stockpiled too many PCs, and must be watched carefully for impacts to Intel.  

Bolton was encouraged by the upcoming release of Sapphire Rapids for this quarter, which he expects to properly ramp up through the year. Moreover, Intel shipped over 1 million Ice Lake servers in Q4, which drove up revenues.  

Bolton is awaiting Intel’s investor day, which is set for February 17. At that point he will have more clarity on fabrication plant and expansion progress.  

On TipRanks, INTC has an analyst rating consensus of Hold, based on five Buy, nine Hold, and four Sell ratings. The average Intel price target is $55.50, indicating a possible 12-month upside of 15.19%. As of 9:45am EST Thursday, INTC was trading at $48.18 per share.  

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