Intel Faces Uphill Battle as Analysts Label the Company 'Profoundly Broken'

Bernstein's Stacy Rasgon lowered their price target on Intel (NASDAQ: INTC) by 16.7% from $42 to $35 on 2024/04/26. The analyst maintained their Hold rating on the stock.

Intel's first quarter 2024 results were a mixed bag, according to Rasgon. While the earnings report showed that the company exceeded expectations in terms of earnings per share (EPS) and revenue, the guidance for the second quarter fell short. Rasgon expressed disappointment with the management's projections, stating that Intel's near-term prospects are "extremely challenged."

Rasgon went on to describe Intel as "profoundly broken," suggesting that it will take years for the company to see any significant improvements. Despite Intel's efforts to repair the situation, the analyst believes that the company is still struggling to find its footing.

In the first quarter of 2024, Intel reported an EPS of $0.18, surpassing the Zacks Consensus Estimate of $0.13 by a significant margin. The company also achieved a year-over-year EPS growth of 450%, compared to Q1 2023's $(0.04). However, Intel's revenue of $12.7 billion fell slightly short of the Zacks Consensus Estimate of $12.9 billion.

Looking ahead to the second quarter, Intel's management provided guidance of an EPS of $0.10 and revenue ranging from $12.5 billion to $13.5 billion. The company expects a gross margin of 43.5%.

Despite the less optimistic outlook, CEO Pat Gelsinger remains confident in Intel's progress and future prospects. Gelsinger highlighted the positive impact of innovation in Intel's client, edge, and data center portfolios, as well as the production of leading-edge semiconductors in the United States.

Following Rasgon's report, other analysts also updated their ratings for Intel on April 26, 2024. Morgan Stanley's Joseph Moore lowered their price target by 25% to $36, maintaining a Hold rating on the stock. Wells Fargo's Aaron Rakers reduced their price target by 11.6% to $38, also maintaining a Hold rating. Wedbush's Matt Bryson adjusted their price target from $40 to $32.5, representing a decrease of 18.8%, while keeping a Hold rating as well.

According to data from WallStreetZen, 21.7% of top-rated analysts currently have a Strong Buy or Buy rating on INTC, while 65.2% view it as a Hold. Another 13% either recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Intel's upcoming year will deliver an EPS of $1.12, representing a 16.8% increase compared to the previous year.

Since Intel's latest quarterly report on April 25, 2024, the stock price has declined by 9.2%. However, on a year-over-year basis, the stock has seen a 9.7% increase. During this period, Intel has trailed behind the broader market, with the S&P 500 seeing a 25.7% gain.

Intel Corporation, headquartered in Santa Clara, California, is a global leader in the design, manufacture, and sale of computer products and technologies. The company operates through various segments, offering a range of platform and non-platform products, as well as high-performance compute solutions for different industries. Intel serves original equipment manufacturers, original design manufacturers, and cloud service providers.

Stacy Rasgon, the Bernstein analyst who issued the updated rating on Intel, has been consistently ranked in the top 9% among Wall Street analysts by WallStreetZen. With an average return of 33.4% and a win rate of 73.9%, Rasgon specializes in the Technology sector.

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