Mizuho Analyst Lowers Intel Price Target by 18.2%, Maintains Strong Buy Rating

Mizuho's Vijay Rakesh lowered their price target on Intel (NASDAQ: INTC) by 18.2% from $55 to $45 on 2024/04/26. The analyst maintained their Strong Buy rating on the stock.

In their assessment of Intel's Q1 2024 earnings, reported on April 25, the analyst noted that the company reported in-line results but provided softer guidance for Q2. Despite this, Rakesh remains positive on the stock and highlighted several factors supporting their optimism.

According to Rakesh, Intel's stable compute server market share, upcoming product ramps for Sierra Forest and Granite Rapids, and a valuation with low expectations contribute to their bullish outlook on the stock.

For Q1 2024, Intel reported earnings per share (EPS) of $0.18, surpassing the Zacks Consensus Estimate of $0.13. This also represents a significant improvement compared to Q1 2023's EPS of $(0.04), marking a 450% year-over-year increase. Additionally, the company reported revenue of $12.7 billion, slightly missing the Zacks Consensus Estimate of $12.9 billion but still reflecting an 8.5% increase compared to Q1 2023.

Intel's gross margin for Q1 2024 stood at 45.1%. Looking ahead to Q2 2024, the company's management provided guidance of an EPS of $0.10. They expect revenue in the range of $12.5 billion to $13.5 billion, with a gross margin of 43.5%.

Intel CEO Pat Gelsinger expressed confidence in the company's progress, stating, "We are making steady progress against our priorities and delivered a solid quarter. Strong innovation across our client, edge, and data center portfolios drove double-digit revenue growth in Intel Products."

Gelsinger also highlighted the significance of Intel 3, which is currently in high-volume production, as it marks the first time in nearly a decade that leading-edge semiconductors are being manufactured in the U.S. Furthermore, Gelsinger emphasized Intel's commitment to regaining process leadership next year through the growth of Intel Foundry.

Despite Mizuho's positive outlook on Intel, other analysts have taken a more cautious stance. Joseph Moore of Morgan Stanley lowered their price target on the stock by 25%, from $48 to $36, while maintaining a Hold rating. Aaron Rakers of Wells Fargo also lowered their price target, reducing it by 11.6% from $43 to $38, and maintained a Hold rating. Matt Bryson of Wedbush lowered their price target by 18.8%, from $40 to $32.5, and kept a Hold rating on the stock.

An analysis of analyst ratings reveals that 21.7% of top-rated analysts currently rate INTC as a Strong Buy or Buy, while 65.2% view it as a Hold. On the other hand, 13% either recommend or strongly recommend selling the stock.

The consensus forecast among analysts indicates that Intel's upcoming year will deliver an EPS of $1.12. If these projections hold true, the company's next yearly EPS will mark a 16.8% increase on a year-over-year basis.

Since Intel's latest quarterly report on April 25, the stock price has experienced a decline of 9.2%. However, when comparing year-over-year performance, the stock has seen a positive growth of 9.7%. Intel's performance during this period has trailed behind the S&P 500, which has gained 25.7%.

As for Vijay Rakesh, the Mizuho analyst who provided the updated rating, they are ranked by WallStreetZen in the top 1% among 4,566 Wall Street analysts. Rakesh specializes in the Consumer Cyclical and Technology sectors and boasts an average return of 17.6% and a win rate of 53.5%.

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, including CCG, DCG, IOTG, Mobileye, NSG, PSG, and All Other. Intel offers a wide range of platform products, such as central processing units and chipsets, as well as non-platform products like accelerators, connectivity products, and memory and storage products. The company serves customers in various industries, including original equipment manufacturers, original design manufacturers, and cloud service providers. Intel also collaborates with MILA to advance artificial intelligence methods for drug discovery.

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