Intel Corporation (NASDAQ:INTC)
INTC is trading relatively flat on the year, putting in a recent higher relative low and reclaiming its 200 day moving average. INTC is currently sitting in a large, macro trend wedge and is consolidating as it nears what could be an apex point. Which way can we expect it to break?
INTC Analyst Expectations
Credit Suisse had the following positive outlook on INTC
Finally, Some Tailwinds
Bottom Line. We see multiple tactical reasons why current levels represent an attractive entry point on the stock: (1) Limited Downside: INTC shares have lagged the broader group by ~550 bps since the 05/13 trough in the SOX and now trade at an almost ~4 turn discount on P/E, a ~30% discount on EV/EBITDA, and a >3% dividend yield, (2) NB ODM Data Better: Albeit only one month, NB ODM data for May increased ~24% m/m much better than seasonal/expectations, suggesting potential C2Q Rev upside ($150-$450m) and/or leaner than expected inventory (by 0.5 to 2 weeks) heading into C2H16, (3) AAPL Helps 2H Hockey Stick: With iPhone7 becoming more real (speculation of AT&T (NYSE:T) on Friday – Bloomberg), the AAPL thin-modem could add ~200 bps of growth to C2H, implying the ~10% h/h ramp to meet CY16 Rev guidance is perhaps not as aggressive as some fear, (4) CY16 OpEx Provides Cushion: Street is currently modeling CY16 OpEx of $21bn or $400m greater than Company guidance despite recently announced restructuring providing at least 5 cents of cushion to C2H EPS estimates of $1.33, and (5) DCG Compares Become Easier: After comping to ~20% y/y in C4Q14 and C1Q15, growth compares dropped to 9.8% in C2Q, 11.9% in C3Q, and 5.3% in C4Q along with recent data points of cloud spending improving into C2H and the Broadwell launch in late March we see DCG returning to >10% y/y growth by C3Q at the latest. A return to >10% y/y growth will allow investors to refocus on our Structural Thesis DCG earnings have increased ~75% since 2013 and the Companys TAM expansion strategy (Networking, Memory, Silicon Photonics, RSD) sets the foundation for $2.50 in EPS in coming years. We continue to rate INTC OP with a $40 TP or 14.8x our CY17 EPS based on a SOTP which values PCs at less than 10x and DCG at 18x. We see multiple tactical reasons why current levels represent an attractive entry point on the stock.
About Intel Corporation
Intel Corporation, incorporated on March 1, 1989, is engaged in the design and manufacture of digital technology platforms. The Company sells these platforms to original equipment manufacturers (OEMs), original design manufacturers (ODMs), and industrial and communications equipment manufacturers in the computing and communications industries. The Company’s segments include Client Computing Group (CCG), Data Center Group (DCG), Internet of Things Group (IOTG), Software and Services (SSG) and All Other. The Company’s All Other segment includes Non-Volatile Memory Solutions Group and the New Devices Group. The Company’s platforms are used to deliver a range of computing experiences in notebooks (including Ultrabook devices), 2 in 1 systems, desktops, servers, tablets, smartphones, and the Internet of Things (including wearables, transportation systems and retail devices). It also develops and sells software and services focused on security and technology integration.