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is set to report fiscal third-quarter results after the market closes on Thursday. Analysts are already looking beyond the report.
Intel shares (ticker: INTC) are up 11% year-to-date but have fallen about 12% in the past six months. The stock closed up 0.2% to $55.37 on Wednesday. For the third quarter, analysts expect adjusted earnings of $1.11 a share and sales of $18.23 billion, according to FactSet.
Morgan Stanley analyst Joseph Moore wrote earlier this week that the stock has underperformed since June amid concerns about
Advanced Micro Devices
winning market share, manufacturing delays, and
pivoting from Intel to its own M1 line of chips for Macbooks.
For the third quarter, Moore expects the PC market will be weaker than usual due to broader supply constraints for things like power management chips, which have held back the overall PC business despite solid demand.
Still, he thinks such trends are already baked into estimates. Instead, he thinks investors are more focused on the company’s Nov. 18 analyst day. At that event, he expects the company to address several key debates regarding 2022, including gross margin pressures. Moore predicts gross margins will be more stable than some pessimists anticipate.
“But we would also argue that if there is anything from the analyst meeting that investors could see as a negative, on gross margin, on capital spending, or on product timing, the company should try to get that negative color out on thisearnings call, as we don’t think the company is going to want the stock to potentially sell off on the day of the analyst day,” Moore wrote.
Moore rates Intel stock Overweight with a $67 price target. He wrote that Pat Gelsinger, who was previously VMWare’s chief executive, becoming Intel’s CEO earlier this year was among the best case scenarios for that role.
“While we don’t see the new CEO as a quick fix, we do see the company creating a multi year path back to a stronger market position,” Moore wrote.
Susquehanna analyst Christopher Rolland, who has a Neutral rating and $60 price target, wrote Wednesday that while he doesn’t expect a formal 2022 guidance yet, the narrative around the next year will be very important for investors.
“Demand for education/low-end PCs and Chromebooks will be of particular importance, an area that slowed considerably in 3Q, and one in which Intel holds dominant share today,” Rolland wrote.
He ultimately expects the company to beat expectations for the third quarter. Still, he’s more focused on the risks heading into the fourth quarter and beyond amid concerns about declining PC demand backdrop and the potential for worsening margins.
“Note that just a few days later on October 27, Intel will also host an event to showcase its latest technologies and perhaps launch new products,” he wrote. “Therefore, investors should prepare for potential increased volatilityaround these dual announcements.”
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