Earnings Report Preview | Stock Price Strongly Rebounds 65% Is Intel's Turning Point Here?

Zhitong App has learned that Intel will announce its fourth-quarter earnings report after the US stock market closes on January 25th (morning of January 26th Beijing time). The market generally expects Intel's Q4 revenue to be $15.16 billion, compared to $14.04 billion in the same period last year, with earnings per share of $0.45, compared to $0.10 in the same period last year.

In the past year, Intel's stock price has experienced a strong rebound, with an increase of about 65%, while the S&P 500 index has risen by 22% during the same period. In the past six months, the stock has risen by nearly 40%, surpassing the 5% increase of the S&P 500 index. The strong performance has continued to make investors optimistic about the stock's performance in 2024.

In the short term, Intel's performance in the fourth quarter will determine its short-term trend. Due to the strong performance and guidance in the third quarter, based on analysts' recent revised estimates, the market generally has high expectations. Additionally, with management's efforts to take multiple new initiatives to highlight the company's focus, including divesting its programmable solutions business, investor sentiment towards the stock has improved. Furthermore, Intel is also betting on its core CPU business and expanding its artificial intelligence plans to ensure its share in the AI market.

The company's diversified business portfolio enables it to serve multiple industries, which will help Intel establish a leadership position in the field of artificial intelligence. The company has indicated that it has sufficient financial resources to effectively compete for these growth opportunities. As for this quarter's expectations, Intel should demonstrate sustained strength while advancing its strategic focus. Intel is also starting to benefit from a slight rebound in the PC market, which had previously experienced a significant decline.

The company has also done well in controlling costs, which is likely a focus of management. Although profit margins may have declined compared to a year ago, there should be a significant improvement compared to the previous two quarters. In terms of revenue, if it significantly exceeds the midpoint of management's guided expectations, it will enable Intel to achieve year-on-year growth.

Wall Street Views

Analysts generally hold a cautiously optimistic view on Intel's performance prospects.

TD Cowen raised Intel's target price from $38 to $45 and maintained a "market perform" rating. The firm stated that it expects a slight improvement in performance in the fourth quarter driven by small improvements in customer and data center and AI department sales. However, considering the seasonal factors of Mobileye (MBLY.US) and server sales, the firm lowered its expectations for Intel's first quarter.

Susquehanna raised Intel's target price from $38 to $42 and maintained a "neutral" rating. The company stated that it expects Intel's fourth-quarter performance to be in line with expectations. The firm also expects the fourth-quarter profit margin to meet expectations, but due to seasonal factors in the first quarter, the profit margin is expected to decline. Mizuho has raised its target price for Intel from $50 to $58 and maintained a "buy" rating. The bank stated that looking ahead to 2024 in the semiconductor and automotive sectors, although inventory levels for PCs, memory, and smartphones are returning to normal, unfavorable factors will continue to persist due to weak global demand and economic slowdown in Europe and other economies.