The Q3 earnings reports are coming in at a fast pace, and now it’s almost time for Intel (NASDAQ:INTC) to deliver its latest financial statement. After a strong set of results in Q2, as the company announces its Q3 statement today after the close, investors will be hoping for further signs of a recovery in the PC market.
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According to Raymond James analyst Srini Pajjuri, that could be in the cards. Although consumer demand remains relatively weak, the analyst’s Asia-based analysis indicates signs of a stabilizing PC market, particularly with more promising trends in commercial orders.
“We believe inventory correction is now behind,” Pajjuri goes on to say, “and are modeling Intel’s PC CPU business to grow on a y/y basis in 4Q23 due to easier comps.”
Before that, though, there are the Q3 results to take care of, and with management previously implying that Q3 is “tracking above the mid point of the original guidance,” Pajjuri believes the trend continued through the rest of the quarter. As such, the analyst has increased his 3Q23 revenue/adj. EPS forecast from $13.4 billion/$0.20, respectively, to $13.6 billion/$0.22.
Turning to Q4, Pajjuri anticipates Intel’s guide will closely resemble the Street’s call for revenues of $14.4 billion and adj. EPS of $0.33.
Looking further ahead to 2024, however, accounting for PSG (programmable solutions group) weakness, his FY revenue estimate is lowered a bit – from $61.69 billion to $60.447 billion.
That said, taking a wider view of Intel’s prospects, Pajjuri has an upbeat take: “We believe risk/reward is attractive given stabilizing business conditions, improving execution, and emerging AI opportunities. PC inventory correction is behind, end demand looks stable, and risk from ARM is modest, in our view,” the analyst said. “We expect share losses to moderate further in 2024 and believe that GPU cannibalization risk is manageable. Manufacturing roadmap appears on track and an 18A customer announcement should further validate management’s execution.”
Conveying his confidence, Pajjuri rates Intel shares an Outperform (i.e., Buy), along with a $40 price target. Should his thesis play out, a potential upside of ~24% could be in the cards. (To watch Pajjuri’s track record, click here)
Pajjuri, though, is amongst a minority on Wall Street. 5 others join him in the bull camp, but with the addition of 20 Holds and 5 Sells, the stock claims a Hold consensus rating. Still, the $36.78 average target represents upside of ~14% for the months ahead. (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.
