Analyst, citing PC resilience, upgrades Intel

The chip maker is in line to benefit from an enterprise refresh cycle, gains in Windows tablets and cost cuts, according to a long-time skeptic of the stock.

By TheStreet Staff Aug 19, 2013 1:13PM

Outside Intel headquartersBy Chris Ciaccia,TheStreet

 

The reports of my death have been greatly exaggerated. -- Mark Twain

 

While the great author may have been the first to express this sentiment, it's applicable to today's PC industry.


thestreet logo

As such, the weakness in Intel (INTC) shares may be unwarranted, according to Piper Jaffray analyst Gus Richard, who has upgraded Intel shares to "neutral" from "underweight," with a $22 price target.

 

The chip industry is now solidly in the post-PC era, but "PCs are not going away anytime soon," Richard wrote today in a research note. The analyst said he expects a modest refresh in the corporate PC demand from April 2014, as Microsoft (MSFT) plans to release Windows 8.1 in the fourth quarter of this year. (Microsoft owns MSN Money.)

 

Aside from the corporate refresh cycle, Intel is benefiting from its move into processors for tablets; it's preparing for the launch in the year's second half of its Bay Trail processors for tablets. 


While low-end tablets will continue to replace low-end notebooks, they're not going to replace corporate machines, especially the higher-end ones, anytime soon, Richard wrote. As such, he modestly raised his fiscal 2014 estimates for Intel and said he expects revenue to rise in the mid-single digits after two straight years of decline.


A huge opportunity in tablets 

Bay Trail is expected to see a huge amount of support, as tablets continue to be more prevalent not only for consumption needs but for computing needs as well. That could be a huge opportunity for Intel, something it really hasn't had in the past.

 

"While some cannibalization of low-end consumer notebooks is likely to occur, we believe Bay Trail will be accretive overall to revenue and could drive ~$500M to $1B to the top line," Richard wrote. "Intel is aggressively promoting Bay Trail, and we think this platform will finally drive market share for the company in tablets."

 

In addition to valuation and Intel's 4.1% dividend yield as catalysts, the analyst identified the Intel Developer Forum in mid-September as a potential catalyst for the stock. Intel is expected to use the event to highlight its mobile chip offerings, particularly Bay Trail.

 

Another catalyst could come out of the company's upcoming analyst day event, on Nov. 21, which will be the first time new CEO Brian Krzanich has a "chance to unveil his vision for the company," Richard wrote.

 

More from TheStreet.com

1Comment
Aug 23, 2013 12:54PM
avatar
Gus Richard must be one of those dead fish analysts. INTC has been above $22 for some time, so his target price for an "upgrade" is rather lame. 
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

ABOUT TECHBIZ

Start investing in technology companies with help from financial writers and experts who know the industry best. Learn what to look for in a technology company to make the right investment decisions.

RECENT POSTS

Google unveils modular smartphone

Dubbed 'Project Ara,' the phone would have interchangeable parts, such as cameras or lighters, that could be slotted into a metal frame and held in place by magnets.

VIDEO ON MSN MONEY

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min

MSN MONEY'S