Goldman Sachs Analyst Lowers Intel's Price Target by 12.8% on Delayed Recovery

By Don Francis, Editor
April 27, 2024 10:26 AM UTC
Goldman Sachs Analyst Lowers Intel's Price Target by 12.8% on Delayed Recovery

Goldman Sachs's Toshiya Hari lowered their price target on Intel (NASDAQ: INTC) by 12.8% from $39 to $34 on 2024/04/26. The analyst maintained their Strong Sell rating on the stock.

Hari's decision came after assessing Intel's Q1 2024 earnings report, which was released on April 24. The company reported earnings per share (EPS) of $0.18, beating the Zacks Consensus Estimate of $0.13 and showing a significant improvement from Q1 2023's EPS of $(0.04). However, Intel's revenue of $12.7B fell short of the Zacks Consensus Estimate of $12.9B, although it did surpass Q1 2023's revenue by 8.5%.

In their assessment, Hari noted that Intel's management guided Q2 below consensus due to the delayed recovery in traditional server demand. This delay is attributed to the continued prioritization of AI infrastructure spending by cloud and enterprise customers. As a result, Intel is expected to lose wallet share within the data center compute market to competitors like Nvidia and Arm.

Intel's Q2 2024 guidance includes an EPS of $0.10 and revenue in the range of $12.5B to $13.5B, with a gross margin of 43.5%. Despite the challenging outlook, Intel's CEO Pat Gelsinger expressed confidence in the company's plans to drive sequential growth throughout the year. Gelsinger highlighted the strong innovation across Intel's client, edge, and data center portfolios, as well as the production of leading-edge semiconductors in the U.S. for the first time in almost a decade.

Following Hari's rating update, other analysts also adjusted their opinions on Intel. Morgan Stanley's Joseph Moore lowered their price target by 25%, from $48 to $36, while maintaining a Hold rating on the stock. Wells Fargo's Aaron Rakers lowered their price target by 11.6%, from $43 to $38, also maintaining a Hold rating. Wedbush's Matt Bryson decreased their price target by 18.8%, from $40 to $32.5, and similarly retained a Hold rating.

According to data from WallStreetZen, 21.7% of top-rated analysts currently rate INTC as a Strong Buy or Buy, while 65.2% consider it a Hold. On the other hand, 13% recommend or strongly recommend selling the stock.

The consensus forecast among analysts predicts that INTC's upcoming year will deliver an EPS of $1.12. If these predictions hold true, it would represent a 16.8% increase in yearly EPS compared to the previous year.

Since Intel's latest quarterly report, the stock price has declined by 9.2%. However, on a year-over-year basis, the stock is still up by 9.7%. It's worth noting that during this period, INTC has been trailing behind the S&P 500, which has risen by 25.7%.

Intel Corporation, headquartered in Santa Clara, California, is a global company engaged in the design, manufacture, and sale of computer products and technologies. The company operates through several segments, including CCG, DCG, IOTG, Mobileye, NSG, PSG, and All Other. Intel offers a range of platform products, such as central processing units and chipsets, as well as non-platform or adjacent products like accelerators, graphics, and memory and storage products. Additionally, the company provides high-performance compute solutions for various industries and embedded applications for sectors like retail, industrial, and healthcare. Intel serves original equipment manufacturers, original design manufacturers, and cloud service providers.

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