Intel Earnings Do Little to Excite Investors: What to Know
Intel stock is struggling for direction Friday after the chipmaker reported a fourth-quarter beat but gave weak guidance. Here's what Wall Street has to say.
Intel (INTC) stock is bouncing between positive and negative territory Friday as Wall Street weighs the embattled chipmaker's top- and bottom-line beat for its fourth quarter against a weaker-than-expected outlook for its first quarter.
In the three months ending December 28, Intel's revenue decreased 7.4% year over year to $14.3 billion. Its earnings per share (EPS) slumped 75.9% from the year-ago period to 13 cents.
"The fourth quarter was a positive step forward as we delivered revenue, gross margin and EPS above our guidance," said Intel interim co-CEO and CEO of Intel Products Michelle Johnston Holthaus in a statement.
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Holthaus added that Intel's "renewed focus on strengthening and simplifying our product portfolio, combined with continued progress on our process roadmap, is positioning us to better serve the needs of our customers."
The results beat analyst' expectations. Wall Street was anticipating revenue of $13.8 billion and earnings of 12 cents per share, according to CNBC.
For the first quarter of its new fiscal year, Intel said it expects revenue in the range of $11.7 billion to $12.7 billion and earnings of approximately zero cents per share. This is well below the $12.9 billion in revenue and 9 cents per share in earnings analysts are calling for.
"Our Q1 outlook reflects seasonal weakness magnified by macro uncertainties, further inventory digestion and competitive dynamics," said Intel interim co-CEO and Chief Financial Officer David Zinsner in a statement. "We will remain highly focused on execution to build on our progress and unlock value."
David Wagner, head of equity and portfolio manager at Aptus Capital Advisors, says for him, the person who will be tapped as Intel's new CEO is more important than this print. "At the end of the day, it's hard to get a new direction for the firm if we don't know who is at the helm," he notes.
Is Intel stock a buy, sell or hold?
Intel's woes both on and off the price charts have been widely discussed across Wall Street. As for its share price, the former Dow Jones stock is down 53% over the past 12 months vs the S&P 500's 24% gain. Unsurprisingly, analysts are firmly on the sidelines when it comes to the semiconductor stock.
According to S&P Global Market Intelligence, the average analyst target price for INTC stock is $22.55, representing implied upside of nearly 14% to current levels. Meanwhile, the consensus recommendation is Hold.
Financial services firm Oppenheimer is one of those with a Perform rating (equivalent to a Hold) on the large-cap stock.
"Intel remains largely tied to PC growth, and our relatively bearish stance reflects our belief that the PC market has begun a secular decline,”" says Oppenheimer analyst Rick Schafer. "We remain constructive on the data center outlook for now but remain cautious of PC unit growth and associated revenue growth."
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