Intel Corporation (NASDAQ: INTC) stock fell over 2% in the intraday trading following a cautious stance from leading brokerage firm Susquehanna Financial Group.
Susquehanna Financial Group released a report expressing a cautious outlook on Intel Corporation (INTC). The firm has opted to maintain its Neutral rating on INTC stock but has cut the price target from $42.00 to $40.00.
The brokerage firm’s cautious stance is based on its anticipation of Intel’s first-quarter earnings and guidance, scheduled for reporting on April 25. Susquehanna Financial Group expects the earnings and guidance to either align with expectations or be slightly weaker than anticipated.
Susquehanna Report: Cautious Outlook on Intel Stock
The report suggests satisfactory shipments from Intel’s Client segment. However, it notes weakness in the Server segments ahead of new product launches scheduled for the second half of the year.
Intel’s Client segment demonstrates robustness, with positive PC checks pointing to better-than-expected notebook Original Design Manufacturer (ODM) builds and PC sell-through. However, the Server segment paints a contrasting picture.
Despite a slight uptick in March, checks for the Data Center and AI (DCAI) segment were lackluster at the beginning of the quarter. The anticipated launches of Sierra Forest and Granite Rapids may take time to gain momentum, posing potential challenges for the company.
The client segment of Intel witnessed a rise in laptop and desktop CPU market share. The laptop share, driven by the Raptor Lake refresh, hit its highest since the first quarter of 2022. However, the new Meteor Lake made up only about 0.2% of Intel’s laptop mix post its December launch, suggesting a slower ramp-up that might pick up pace in the second half of the year.
The report also touched upon the challenges confronting Intel’s other segments. The Altera division is currently undergoing a substantial inventory adjustment expected to continue until the first half of 2024, while Mobileye’s performance may align with forecasts following an initial correction.
The Susquehanna analysis indicates that the Internet of Things (IoT) will experience growth, but it expects telecommunications to continue dragging on performance throughout the year. Moreover, the firm expects Intel’s Foundry business to weigh on the financials until 2026 at the earliest.
Financial Forecast
In terms of financials, Susquehanna forecasts Intel (NASDAQ: INTC) to maintain in-line margins in the first quarter, with improvements anticipated later in the year due to increased volumes.
Despite a lowered price target, the firm remains optimistic about Intel’s potential, particularly in the second half of the year, citing an estimated 3.5 times the 2024 expected enterprise value to sales ratio.
Intel (NASDAQ: INTC) Stock Movement
At the time of this report, the price of INTC stock stands at $34.20, reflecting a decrease of 2.40% from the previous trading session. This week, its value has dropped by 4.17%. Trading activity has seen 58,929,039 (58.92 million) shares change hands, lower than the average daily volume of 48.63 million.
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