For anyone wanting proof Intel’s (NASDAQ:INTC) Q2 results were not a one off, then the Q3 performance offered just that.
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Investors sent shares skyward after the chip giant provided beats on both the top and bottom line against a backdrop that showed the PC market’s recovery is ongoing and that Intel appears on track to meet the targets laid out in its roadmap.
While revenue fell by 7.7% year-over-year to $14.16 billion, the figure beat Street expectations by $560 million. At the other end, adj. EPS of $0.41 outpaced the forecast by $0.19, boosted by adj. gross margin reaching 45.8% vs. the Street’s call for 42.7%.
There was also much to like about the outlook. For Q4, Intel guided for revenue between $14.6 to $15.6 billion, higher than consensus at $14.35 billion, while adj. EPS is expected to hit $0.44 vs. the Street’s $0.32 forecast.
Moreover, the ramping of the foundry business is going well too. After already confirming that it has secured a significant undisclosed client for its 18A process (who also made a substantial upfront payment), the company said there are 2 more new customers and expects to sign a fourth in Q4. Intel also added two new clients for its advanced packaging services with 6 more in the pipeline.
These developments bode well for the future, says Northland Gus Richard, who believes INTC’s “momentum is building.”
“We believe as INTC regains process technology leadership it will gain markets share,” said the 5-star analyst. “We believe its progress in process technology leadership is demonstrated by the three INTC 18A foundry customer wins. The release of the 18A PDK 0.9 is also an important milestone in INTC’s evolution to a foundry. Finally, packaging is becoming a differentiator and here too we believe INTC is delivering leadership as it adds 2 packaging customers in the quarter with 6 more in the pipeline.”
Sensing Intel’s “mojo is returning,” Richard rates the stock as Outperform (i.e., Buy) while his Street-high price target of $56 suggests shares will surge 53% over the coming months. (Watch Richard’s track record)
Not all on the Street are quite as exuberant with most analysts staying on the sidelines for now. All in all, based on 19 Holds, 5 Buys and 4 Sells, the stock claims a Hold consensus rating. The forecast calls for modest 12-month returns of 3% considering the average target currently stands at $37.45. (See Intel stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
