Please note that this commentary does not constitute investment advice, and the author currently holds no positions in the stocks discussed.
Intel’s Leadership Transition and Market Outlook
Recent changes in leadership at a company often signal a period of significant transformation, marked by increased volatility and uncertainty. C.J. Muse, a prominent analyst at Cantor Fitzgerald, describes the current climate at Intel as a critical juncture as the company navigates these changes.
Revised Price Target for Intel
Muse has recently adjusted his price target for Intel stock, reducing it from $29 to $20, while maintaining a ‘Neutral’ rating overall. This adjustment underscores the cautious outlook as the company prepares for its upcoming financial results.
Upcoming Financial Results
The upcoming Q1 2025 financial results, expected next week, will be the first to be reported under the new CEO, Lip-Bu Tan. Muse indicates that he anticipates “little change”in expectations, suggesting that the company may engage in “additional aggressive cost-cutting”over the next quarter to improve its performance.
“We expect Intel to post in-line results followed by a miss for the guide as the company takes advantage of a new CEO to reset numbers given recent volatility and macro headwinds.”
Challenges Ahead
With Tan stepping into his role just weeks ago and amidst the backdrop of market volatility, the analyst does not foresee guidance for the calendar year 2025. This lack of projection contributes to the overall uncertainty surrounding Intel’s near-term strategy.
Potential Catalysts for Growth
Muse highlights several bullish factors that could positively influence Intel’s trajectory, including:
- Further reductions in workforce to enhance efficiency.
- Intel Foundry Day scheduled for April 29, featuring a keynote by the new CEO.
- Possible announcements regarding joint ventures with key customers.
However, it’s noteworthy that TSMC has publicly rejected any joint ventures or technology transfer arrangements with Intel, as reiterated during its earnings call last week. This statement came after initial reports hinted at a potential collaboration between Intel and TSMC, which would have included joint management of Intel’s US-based fabs along with other chip designers like Qualcomm and NVIDIA.
Valuation Insights
Despite the recent challenges, Cantor Fitzgerald has set a fair value target of $26 per share for Intel. This projection reflects a two-fold revenue multiple from the product division, in addition to a $15 billion valuation for Intel Foundry, complemented by an estimated $29 billion from other investments.
“We think risk/reward remains skewed to the upside. But given the tough slog ahead, we reiterate our Neutral rating.”
Current Market Performance
As of the latest trading session, Intel’s shares have seen a slight decrease of over 1%.Since the beginning of the year, the stock has experienced an approximate decline of 8%.
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