Intel (NASDAQ:INTC) delivered better-than-expected Q1 financials. Further, INTC stock is up about 5% in after-hours of trade, as the company said it is seeing increasing stability in the PC market with its inventory corrections proceeding as planned. While the operating environment is improving, the upside in INTC stock remains capped based on analysts’ average price targets.
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Heightened competition and ongoing softness in the PC/server market remain a drag for INTC, noted Mizuho Securities analyst Vijay Rakesh. He reiterated his Hold recommendation on INTC stock after the Q1 earnings. Meanwhile, his price target of $30 is roughly in line with its closing price on April 27.
The analyst expects inventory issues to continue to impact INTC’s gross margin. Meanwhile, macro concerns, competitive pricing, and performance headwinds from AMD Genoa and Bergamo could remain a drag.
While Rakesh recommends a Hold, Hans Mosesmann of Rosenblatt Securities reiterated his Sell rating for INTC stock post-Q1 print. The analyst expects the company’s gross margin to remain pressured in the near to medium term.
Along with margins, cash remains problematic for INTC, noted Mosesmann. He added, “Cash remains problematic amidst a tough macro, share losses in data center and massive capacity investments.”
Is Intel a Buy, Sell, or Hold?
Intel sees a modest recovery in demand in the second half. Meanwhile, the PC market and inventory trends are showing signs of improvement. However, Intel warned that the server and networking markets are yet to bottom out due to weakness in the cloud and enterprise markets. Also, the factory underload charges will likely weigh on INTC’s margins.
Intel stock sports a Hold recommendation on TipRanks after its Q1 financial report. It has received four Buy, 15 Hold, and four Sell recommendations. At the same time, these analysts’ average price target of $29.20 indicates 2.2% downside potential.
