Intel’s Ability To Catch Up To TSMC In Doubt As Analysts Upgrade Its Target Price Across The Board

Intel's CEO: Pat Gelsinger.

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

This is an opinion article summarizing analyst views and the views of the analysts may not necessarily reflect the views of the publication.

After reporting a strong earnings yesterday, Intel Corporation has received some much-needed respite from Wall Street analysts in the form of price target upgrades. The company has been struggling with manufacturing its silicon products on the latest semiconductor process nodes, and its need to shake things up was clear as it announced the retirement of its current chief executive officer Mr. Robert Swan and announced his replacement earlier this month.

Despite posting revenue growth in its fourth-quarter yesterday, Intel's shares were down in pre-market as the market weighed its new CEO, Mr. Pat Gelsinger announcement to continue to focus on in-house chip production.

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The gist of nearly all the analyst upgrade surrounds Intel's strong Q4 earnings. During the previous quarter, the Santa Clara chipmaker earned $20 billion in revenue as it topped both analyst and self-set expectations for the quarter and exhibited no growth over the previous fiscal year's full fiscal quarter.

Of particular importance were Intel's results for its Datacenter group which posted $6.1 billion in revenue, and beat analyst expectations of $5.48 billion. The company's strongest segment remained its Client Computing Group (CCG) which earned Intel $10.9 billion and also beat analyst expectations.

($)New Target:Previous Target:Change (%):
BMO Capital:75707
Morgan Stanley:72703
Roth Capital:605020
RBC Capital:474017.5

The highest price target comes from BMO Capital, which has increased its prior value by 7% to reach a new target value of $75/share for Intel. BMO analyst Ambrish Srivastava cites Intel's big earnings beat in the fourth quarter as the primary factor that drives his price target upgrade. He then goes on to add that Mr. Gelsinger's statements do not offer much detail in clearing up questions about how Intel will manage its production, but he still shares an optimistic view about the company's shift in focus to address its current manufacturing problems.

The second-highest price target is from investment bank Morgan Stanley, who has upgraded Intel's target price to $72/share from an earlier $70/share to mark for a 3% change. Analyst Joeseph Moore keeps an Overweight rating on Intel shares and bases his tempered optimism on Intel's strong quarterly results. Additionally, Moore believes that Mr. Gelsinger has already engaged with Intel's tech teams and provided indications about how manufacturing will proceed. The analyst however did not provide these indicators in the snippet that we are reporting on.

Intel Corporation's earnings results for the fourth quarter of 2020. Image: Intel Corporation

While Gus Richard of Northland also raised Intel's price target, to $57/share from $46/share for a whopping 24% change (the largest change in our list), he is highly pessimistic about Intel's ability to keep up with TSMC in the chip manufacturing arena. According to Richard, it is unlikely that Intel will catch up to TSMC soon, and while the company might be able to solve its manufacturing problems, the time duration of this solution is not priced into Intel's share price. While the research note snippet does not provide any details on price impact that should be factored in, Richard still believes that Intel shares should perform in line with its peers - a conclusion likely stemming from the company's strong presence and performance in the Datacenter segment.

RBC's Mitch Steves cuts right to the heart of Intel's earnings and points out that Datacenter earnings dropped by 16% in the fourth quarter, and states that he believes Intel will continue to lose market share to competitors through 2023 since the company has indicated that it plans to manufacture its products in-house until then. Subsequently, the analyst rates Intel's shares as Underperform, but increases his price target by ~18% to $47/share. a research note. Wedbush's Matt Bryson mirrors a similar belief to others that Gelsinger's comments only suggest that Intel's recovery will only be in the long term.

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