Shares of chipmaker Intel (INTC) are down in today’s trading as investors await its Q3 earnings results on October 31 after the market closes. Analysts are expecting earnings per share to come in at -$0.02 on revenue of $13.02 billion. This equates to 105% and 8.1% year-over-year decreases, respectively, according to TipRanks’ data.
It is clear that the company has been struggling as it looks to transform its operation into a foundry business that manufactures chips for other companies. Intel has staged massive layoffs and suspended its dividend over the past year in order to offset the losses related to this business transformation, which has led the firm to consider selling the foundry division altogether.
However, there are some positives for investors – Intel has surpassed earnings estimates six times during the past eight quarters. Therefore, it is possible that it can come up with a positive surprise this time around as well. Still, any earnings beat is unlikely to surpass last year’s Q3 EPS figure of $0.41 per share.
How Likely Is an Intel Earnings Beat?
Although there is always the possibility of an earnings beat, the odds seem stacked against Intel this time around. In fact, analysts are concerned about competition eating away at Intel’s market share. More specifically, 4.6-star Barclays analyst Tom O’Malley believes that AMD (AMD) likely took 200 basis points of market share during the previous quarter and expects it to continue taking more.
In addition, other bearish analysts are concerned with Intel’s debt load of $53 billion and lack of immediate positive catalysts, according to TipRanks’ Bulls Say, Bears Say tool.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see that options traders are expecting a 10.43% move from INTC stock in either direction right after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement.
It is worth noting that Intel’s after-earnings price moves in the past 13 quarters have mostly been smaller than the 10.43% that is expected. This implies that current option prices might be overvalued. Nevertheless, it is important to remember that the stock did fall over 30% after its Q2 earnings report. Therefore, anything can happen.
Is Intel a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 38% loss in its share price over the past year, the average INTC price target of $25.21 per share implies 12.5% upside potential.
